Can Fintech Fill Asia’s SME Lending Gap?

Perhaps no sector has more to gain from innovations in financial technology than small- and medium-sized enterprise (SME) finance, especially in Asia. SMEs accounted for 42 percent of Asia’s GDP in 2014 yet received only 18.7 percent of bank lending according to the Asian Development Bank. Fintech can particularly leverage the rapid growth of Asia’s e-commerce and regional trade, trends that complement SME development.

SME lending gaps persist around the world in both developed and developing economies. Among the many factors limiting lending to the SME sector are limited availability of credit ratings of smaller firms, lack of tangible assets for collateral, and the high costs of making small loans for lenders.