Maximize Value Across the Entire Customer Lifecycle
LENDING CHALLENGES
Survey Report
SME Lending Survey
In our latest industry survey, Provenir explored the challenges financial services organizations face when offering loans to small and medium sized enterprises (SMEs). 179 industry leaders from around the world shared key insights into the problems that limit their ability to lend to SMEs. Respondents were asked to answer questions covering two main areas: 1. Approval speed 2. Challenges While responses varied, the results overwhelming showed that real-time approvals for SME loans, whether for existing or new clients, are the exception and not the norm. This inability to approve loans quickly can be attributed to a number of factors, but respondents highlighted data integration as their biggest issue. Without solving data integration problems, and the other issues identified in this survey, SME lenders will find it almost impossible to reduce approval times without increasing risk. Lenders need the ability to support SMEs with customized products and access to funds exactly when they need them. If lenders fail to provide competitive services, they risk losing both existing and new clients to innovative competitors. Empowering risk teams to easily access and use data is essential for business growth and success.
2
SME Lending – Application Approval Speed Whether an SME needs money to expand, cover running costs, or diversify, having funding at exactly the right time is essential for success. So, we asked survey respondents to share how long on average it takes their business to approve loans for SME clients. To get a deeper understanding of approval speed we broke this down into two categories: approving applications from new clients, and approving applications from existing clients.
APPROVING LOANS FOR NEW CLIENTS Weeks Days Hours Minutes Seconds
Of the industry leaders surveyed, 22% responded weeks, and 39% days, which means that 61% of businesses fail to provide same day approvals for SME loan applicants. Only 8% reported that they could approve a loan in seconds.
8%
22%
12%
19%
39%
APPROVING LOANS FOR EXISTING CLIENTS Weeks Days Hours Minutes Seconds
When asked about approval speeds for existing clients, the number of lenders taking longer than 24-hours to approve loans decreased from 61% to 53%. The results show that in general, lenders report being able to approve applications from existing clients more quickly than new clients, with the number of ‘weeks’ responses dropping by 10%.
12%
10%
12%
41%
25%
3
SME Lending – Key Challenges There are many challenges that can make it difficult for SME lenders to rapidly approve loan applications without sacrificing their risk tolerance. In this multiple- choice question, we asked respondents to select the challenges that were currently impacting their business.
SME LENDING CHALLENGES
54%
53%
49%
33%
13%
13%
12%
Making Changes to Processes and Offer ings
Operationalize Ris k Models in Real-Time
Reliance on Technology Vendor
Communication Between Data & Engineer ing Teams
Skills Gap Data Source Integration - External
Data Source Integration - Internal
The challenges fall into three categories: access to data, technology usability, and human resources. Out of all respondents surveyed, over 53% selected data access to either internal and/or external sources as a challenge that prevented improvements to SME lending processes. The second highest response rate was in the technology usability category, with the ability to operationalize risk models, make changes to processes, and reliance on vendors holding back innovation. The final category, human resources, saw the lowest response rate, but 13% selected challenges in this category.
4
Key Challenge – Data Access SMEs generate a huge amount of data, from financial data like tax returns and accounting documents to alternative data like transaction information and online reviews. But accessing and using that data was reported as a challenge for over half of respondents.
An almost equal number of respondents reported challenges around internal and external data source integrations. Delays integrating data into application decisioning processes causes a number of problems for lenders. 1. It makes it difficult to automate approvals, as data needs to be manually collected. 2. It limits the ability to use advanced analytics tools to manage risk. 3. It slows down approvals, increasing the risk of customers turning to alternative lenders, and reduces growth opportunity. Implementing technology that simplifies and speeds up integration to new data sources is vital to business success. “
85 87 89 91 93 95 97 99
Data Source Integration - External
Data Source Integration - Internal
“The flexibility of Provenir allows us to create our own risk decisioning workflows that can easily connect with any data source.”
” Andy Dodd, Managing Director Hitachi Capital Invoice Finance
5
Key Challenge – Technology
Technology provides the foundation for real-time SME loan decisioning, so it’s not surprising that over a third of respondents selected technology issues as a key challenge. Whether working with an in-house created solution or partner technology, the ability to rapidly make changes to respond to evolving markets is essential for mitigating risk and supporting your customers.
The most common response within the technology category, and a close third overall, was difficulty in operationalizing risk models in real-time. Risk analytics models, whatever language they are written in, facilitate smarter decisions, lower risk, and automated approvals. But delays often occur due to recoding requirements. If your technology doesn’t support the language your risk team like to work in, not only does it slow down deployment cycles, it increases dependency on IT/Dev resources. Implementing technology that is model agnostic eliminates this problem and helps risk teams rapidly push important changes live. A third of respondents also highlighted difficulty in making changes to processes and products as a problem. Whether this is due to reliance on a technology vendor or internal IT/Dev teams, there is a solution that can help give risk teams more control: low-code platforms. Low-code can replace hard-coded solutions, so changes don’t need to be completed by development teams, but instead can be managed by risk team members using drag-and-drop tools.
0 10 20 30 40 50 60 70 80 90 100
88
59
21
Making Changes to Processes and Offerings
Operationalize Risk Models in Real-Time
Reliance on Technology Vendor
“
Provenir empowers the Telia Finance team to create and change credit offerings independently, process customer applications in seconds, and easily integrate to multiple data sources for better quality decisioning.
”
Fredrik Nilsson, Credit Manager Telia
6
Key Challenge – Internal Resources
While technology is essential for automated, real-time SME loan decisioning, your team plays an even bigger part. Your employees bring the knowledge, the creativity, and drive to power innovation. To be truly effective you need technology that supports your team and a team that can take control of your technology. So, how does technology help solve communication problems and reduce skills gaps?
Around 13% of respondents selected Communication Between Data and Engineering Teams and/or Skills Gaps as a challenge their organization faces. Poor communication between Data and Dev teams is often the result of teams having different skill sets and using different tools to perform tasks. One solution to this issue is to use visual environments for building, managing, and deploying processes, risk models, and integrations. With a visual environment instead of a development environment both data and engineering teams can sit at the same table and understand what they are looking at. This facilitates increased cooperation between teams and empowers innovation. Low-code business-user friendly technology can also help solve skills gaps within teams, as it enables team members to take an active role in managing processes without needing expert engineering skills.
10 15 20 25 30
0 5
Communication Between Data & Engineering Teams
Skills Gap
“
The technology we deploy helps us evolve our products and services and our customers’ experience. The Provenir solution provides efficient integration to our data sources, facilitating excellent loan processing capabilities.
” Petr Baron, CEO TBI Bank
7
Provenir helps lenders simplify data integration, make changes quickly, and power real-time risk decisioning. Read more about how Provenir can help your business lower onboarding costs and provide decisions in seconds:
Simplify Data Source Integration
The Provenir Platform simplifies connection to both internal and external sources. Learn more about our Integration Wizard and Drag & Drop mapping tools.
Rapidly Deploy Risk Models
The low-code Platform is model agnostic, eliminating recoding delays. See how the visual tools and in- platform testing make deployment quick and easy.
Make Changes Easily
With a business-user-friendly interface, making changes is accessible to all levels of technical users. Read how our low-code platform supports rapid changes and stronger cross-team communication.
CONTACT PROVENIR
8
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8Made with FlippingBook Digital Publishing Software