Europe’s banks have a golden opportunity to boost lending to small and medium-sized enterprises (SMEs). In the midst of the pandemic, they are the conduits for billions in state funding to support this crucial segment of the economy. However cumbersome legacy IT systems and outdated risk profiling stand in the way. Agile new competitors are already taking customers away from established banks, even though many companies have existing banking relationships.
But banks can stop this business from flowing away; by taking a data-centric approach they can streamline risk assessment and loan approvals, create products personalized to their customers’ needs, meet new regulatory requirements, and ultimately power this potentially high-growth market to the recovery that all economies need post-pandemic.
"Traditional banks will need to look for alternative ways to create innovative lending products if they are to compete for customers with Fintech lenders in the evolving gig economy. Banks should be looking at tailoring products and services to different needs and creating new solutions. Take Uber drivers: a few years ago, there were none, but now there are thousands, needing to buy a car, fund repairs and insurance, and even leverage their vehicle for a side job as, say, a grocery delivery driver."