Chris Skinner is the author of the new book, Digital Bank, which takes a look the challenges and opportunities that lay in the growing digitization of the banking world. In this interview he is sharing his opinion on a wide range of topics related to digital banking.
Only a fraction of the world’s SMEs are funded by public equity. ACCA considers whether the world’s capital markets can do more for small issuers.Xavier Rolet, CEO of the London Stock Exchange Group, has been making the rounds recently, drumming up support for Europe’s SMEs as the most reliable job creators in the region. He’s right, of course, in identifying the sector as a powerful engine of employment, but can the capital markets supply SMEs’ funding needs?
It’s not easy growing a business – and it’s even harder when that business is a social enterprise. Unfortunately, in many emerging markets, the challenges of serving BoP customers are multiplied by difficulties in securing appropriate financing.Take India, for example. The country’s small and medium enterprises sector is severely underfinanced, with a debt gap estimated at INR 26 trillion (around a quarter of the country’s GDP). Banks and larger non-banking financial corporations have not been able to meet this demand effectively. The reasons for the lack of traditional bank funding are manifold, but they primarily stem from the lender’s desire to focus on a company’s track record instead of its future prospects. Traditional lending in India is also largely collateral based, relying on security value rather than business fundamentals as the basis for lending decisions.
A growing body of research on mobile money has a lot to say about its potential to smooth risks and facilitate transfer programs, but a definitive experimental study on what it means for the financial lives of the poor remains undone – a gap we would like to fill with our future work at the Financial Access Initiative.
The Global Competitiveness Report 2012-2013 by the World Economic Forum lists access to finance as the second or the third top constraint to SME growth in almost all developing countries.Tremendous work has been done by our development partners (IFC, EBRD, AfDB and ADB) in providing enhanced liquidity to enable businesses to gain access to financing. But the challenge remains that all these provisions still do not reach SMEs as they cannot meet the bank underwriting conditions to access finance. In other words, in many cases banks have the possibility to lend, but they can’t find qualified borrowers.A recent International Finance Corporation (IFC) study places SMEs’ financing gap in developing countries at $2 trillion. The report called “Closing the Credit Gap for Formal, Informal, Micro, Small and Medium Enterprises,” shows over 200 million formal and informal SMEs in developing countries do not have a loan or overdraft, or have a loan or overdraft but still find access to finance a constraint. A sizeable number of exporters or potential exporters fall into this category. On the other hand, on average, about two-thirds of full time jobs in developing economies are provided by small firms, therefore urgent action is essential in meeting their financial needs, supporting their growth.
The ECN Review of Crowdfunding Regulation 2013 considers the varying applications of the single market legislation to Crowdfunders across Europe both now and in the foreseeable future. Furthermore it takes a look at the Crowdfunding regulation in other relevant countries abroad.
This study provides a summary of crowdfunding initiatives that support developing country entrepreneurs. The purpose of the paper is to present an overview of the crowdfunding industry to help the Department for International Development (DFID) of the UK Government assess the need and value of supporting such initiatives – particularly for climate and environment innovations.
see very interesting Financial Times article...this is what we've been talking about - the potential for those who can get hold of transactional data to do smarter, better lending to SMEs! hope you can all read the article...it is available today, in any case (may need an FT subscription if you get to this later...) matt
Micro, small and medium-sized enterprises have a combined credit need of up to $2.5 trillion globally. The fact that this need persists is due to an intractable standoff between lenders desperate to capture this market, and borrowers unable to convey their creditworthiness in the antiquated ways demanded of them. But in our work in over 20 countries across 4 continents, we at the Entrepreneurial Finance Lab (EFL) have seen glimpses of innovation utilizing “non-traditional” data in these markets that signal a potential easing of the standoff.
The SEC voted unanimously in October to advance rules that would permit startup businesses to cast a wider net in raising capital through online crowdfunding portals — setting the stage for what could look like a tempting new investment opportunity.The proposed rules would let startups raise up to $1 million in a 12-month period from unaccredited investors, though levels of contribution would be capped by their income or net worth. Under current law, the sale of securities to individuals is limited to accredited investors with a net worth of more than $1 million (excluding their home) or those who earn $200,000 or more per year.While the proposal is far from finalized, some advisors worry that the new rules could inspire an irrational enthusiasm among clients who envision getting in on the ground floor of the next Facebook or Twitter.
