Fintech calls for partnership with banks to manage SME rescue package

Fintech company and alternative lender Lumi has called on all lenders to work together in order prevent finance bottlenecks in the wake of the government’s $15 billion small-business loans stimulus measure.

Yanir Yakutiel, CEO of Lumi stated said that Finech platforms’ data and technological capabilities make them an ideal conduit for small-business owners to get their needed cash fast during challenfing times such as those we’re now experiencing.

Yakutiel believes that for the new stimulus policy to be effective, it must:

  • Involve effective deployment of funds, irrespective of physical infrastructure and appropriate allocation of funds.
  • Ensure funds are allocated in a manner that best achieves the stated policy objectives; and
  • Ensure that the conduit’s incentives are aligned by having “skin in the game”.

“As a technology-enabled online SME lender, Lumi is extremely well-positioned as both a data collector to assist policymakers in their decision making process as well as to act as a conduit for both Government (broadly defined as any Commonwealth or state department or agency, AOFM & the RBA) and the banking system to distribute stimulus monies and other policy driven credit products.”

He added, “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 to SMEs to implement the Government’s policy efficiently and quickly enough. 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 challenging operational environment.”

Until now Yakutiel believes the government and the banks have failed small businesses through their inability to

  • engage remotely
  • Process large volumes of applications (relative to size)
  • underwrite SME risk efficiently
  • originate, underwrite and settle transactions online
  • monitor and service portfolios of small loans efficiently
  • manage hardship and other rescheduling and NPL activities flexibly.

“The government and/or the banks could create a pool of capital that is set up in a trust or a warehouse facility,” Yakutiel said. “Multiple trusts/warehouses can be set up to achieve various policy tools (i.e. distinct pools for specific geographies and industries).”

For fintechs, the key to this proposal is the government and/or the banks to define the underwriting, pricing and term parameters so they can originate the loans.

“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,” concluded Yakutiel.

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