Singaporean banks DBS Bank and United Overseas Bank (UOB) tie-up with fintech firms to target small- and medium-sized enterprises (SMEs).
SMEs have traditionally been underserved by banks in the city state. A Visa and Deloitte digital SME banking study in 2015 showed that about 60% of SMEs in the country rely on bank loans for financing and that the risk appetite of banks was limiting SME lending.
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DBS has partnered with Hong-Kong-based AMP Credit Technologies to introduce a new way of assessing credit risk of small businesses that are unable to obtain short-tenor unsecured loans. This method assesses electronically verifiable cash flows such as card payments, which are then measured against sector models of payments and collections.
Following the credit assessment, applicants can obtain a working capital loan of up to S$100,000 ($73,000) without collateral. A DBS spokeswoman says they now have about 200 SMEs in their loans pipeline with an average loan size of S$70,000.
Meanwhile, UOB has become the first Asian bank to partner Israel-based equity crowdfunding platform OurCrowd. The partnership allows the bank’s SME clients to draw investments from accredited investors.
"We are delighted that, following this latest partnership, UOB is now able to offer end-to-end financing solutions – from equity crowdfunding and venture debt to term loans and capital market solutions to support SMEs in every stage of their growth," says Janet Young, head of group channels and digitalisation at UOB.
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