Financial technology companies are bridging the $2 trillion SME funding gap with invoice, supply chain and equity crowd financing, a white paper released by the World Economic Forum’s Global Agenda Council has concluded.
The paper, entitled ‘The Future of Fintech – A Paradigm Shift in Small Business Finance’, also noted the growth of SME-to-SME lending and equity investment from fintech companies, which has quadrupled from $4bn in 2013 to $12bn in 2014.
Peter Tufano, professor and dean at Oxford Saïd Business School, said: “A team of our MBA students spoke to more than 100 CEOs, bank executives and investors to understand the current state of the fintech sector.
“The overwhelming consensus is that fintech has successfully started to gain traction in recent years, yet there remains huge further potential for the sector to develop innovative and sustainable solutions to tap the funding gap for SMEs.”
The need for SME finance has grown, as it represented a top three concern for businesses in the UK, Italy, Spain, the Netherlands, Turkey, Nigeria, Morocco, China, Canada and Argentina.
SMEs account for more than half of the world’s GDP and two-thirds of all employment.
Michael Koenitzer, financial inclusion project lead at the World Economic Forum and council manager, said: “In this case fintech disruptors are increasingly filling the gap banks and investors leave. SMEs can turn to them to get the credit needed to grow their business, as fintech is providing a much needed relief to small businesses around the world.”