A fintech is urging lenders to combine their various strengths through the creation of new partnerships in order to “avoid finance bottlenecks” which would prohibit the government's stimulus measures from being as effective as possible.
Lumi CEO Yanir Yakutiel dubbed the data and technology capabilities fintechs rely on to compete with the big banks “the ideal conduit” for making sure small business owners access the finance they need quickly during these challenging times.
“With the banking sector getting large amounts of liquidity from the government to support SMEs, it still remains technologically and institutionally unprepared to lend this money out and implement the government’s policy efficiently and quickly enough,” explained Yakutiel.
“We’ve seen this kind of bottlenecking countless times before, both in Australia and around the world. We can’t afford to see this happen again.
“Now is the time for fintech lenders like ourselves to do our part and show how the platforms we have built can help banks scale to the size of the challenge, quickly, in a [difficult] operational environment.”
Yakutiel fears the banks and government lack the ability to engage remotely, underwrite SME risk efficiently, originate, underwrite and settle transactions online, and monitor and service portfolios of small loans efficiently – among other considerations.
While fintech lenders tend to carry out two distinct functions of taking credit risk based on predefined credit appetite and originating, underwriting and servicing SME loans, Yakutiel noted those two activities don’t need to remain interlinked.
“Lumi has the origination, underwriting and servicing capacity, as well as the distribution channels, to reach the SMEs that need the policy loans the most and most urgently,” he said.
“The government and/or the banks could create a pool of capital that is set up in a trust or a warehouse facility. Multiple trusts/warehouses can be set up to achieve various policy tools (i.e. distinct pools for specific geographies and industries).”
“If we work together, fintechs will become a catalyst for the stimulus package, massively increasing the effectiveness and speed with which the funds are distributed. We all need to put aside business rivalries and do our part.”