To further increase access to capital and improve the loan approval process for small and medium-sized enterprises (SMEs) in the UAE, London-based Finverity, a mid-market supply chain finance platform focused on emerging markets, has launched its real-time monitoring credit data API.
The easy-to-integrate API (application programme interface) will provide banks and other financial institutions in the MENA region real-time access to the financial data stored within SMEs’ accounting packages. This unprecedented access to data will help the financial institutions in the region make well-informed underwriting decisions regarding SMEs and corporates. It would also significantly reduce the high rate of loan rejection for SMEs due to a lack of financial data and cut down the time it takes to complete a loan application and disburse funds.
Who Can Access the Solution?
While the API solution is available to funders globally on the Abu Dhabi Global Market (ADGM) and Finverity’s platform, the UAE banks and investors will be the first to benefit from the stand-alone solution due to the UAE’s leading position as a key trade finance hub for the UK-based financial services firm. Finverity’s API launch also marks the successful culmination of FinTech Abu Dhabi’s Innovation Challenge 2020. The availability of near real-time quality credit data is a game changer for payables and receivables finance as it creates a level-playing field for SMEs and mid-caps.
According to Viacheslav Oganezov, CEO and co-founder, Finverity, “The credit data API will help bridge the existing trade finance funding gap of $1.7 trillion and give impetus to global trade. The UAE has the potential to strengthen its position as a key global trade finance center, and make use of solutions that help allocate capital more safely and wisely based on better data and increased transparency.”
Where Does It Fit?
The UAE’s mid-market sector has in the past found it harder to have access to financing as compared to larger corporations. The SME sector is key to the growth and diversification of the UAE economy. Although local SMEs represent 95% of companies in the country and 86% of the private sector’s workforce, they account for only 5% of total bank lending in the UAE. While the UAE SMEs’ share of domestic credit is higher than in other nations in the region, it is still significantly lower than in developed markets.
The Way Forward
Evaluating the credit risk of SMEs has been one of the most challenging tasks in lending. Many mid-market SMEs with good credit tend to lose out due to out-of-date or non-existent financial data. By automating the credit assessment process, the API dramatically reduces costs, enabling greater financial inclusion for SMEs. The API will allow funders to determine borrowers’ creditworthiness with much higher certainty and allocate capital more efficiently, thus rewarding the better borrowers and avoiding the “free riders.”
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