Another study that we are launching this year is the Digital SME Lending Study – an Annual Review of the possibility to apply for and receive a loan fully online for Micro and SME customers provided by banks and FinTechs in CEE countries.
The scope of this year’s analysis covers banks and FinTechs that offer at least an online application for an SME loan in the CEE region. In some countries, banks and FinTechs implemented some restrictions on financing SMEs, while some companies stopped lending to SMEs and were therefore not included in the study.
Among countries in the CEE region, Poland has the largest number of banks (5) which offer a digital process for SME lending products. A non-banking financial organization called Omnicredit from Romania seems to be the only one in the CEE region to offer a fully digital lending process for SMEs. Lidya – operating in Poland and Czech Republic in the region – has an automated process for decision-making and loan disbursement but initial communication and customer applications are still processed via email.
If we look at the number of fields small businesses need to complete to apply for a loan, the process still looks a bit complicated. The average number of fields a prospect should complete online is 28, while existing bank customers fill in 16. The more fields a customer needs to complete, the more customers will get lost in the process and the probability of finalizing the application drops with each additional step a customer is required to make. This is especially true of private entrepreneurs who expect the same user experience from financial organization that they enjoy when ordering food delivery or other services via their phones as private individuals. If the process of applying for a loan is more complicated there will be resistance to use it. And as we can see from the analysis, these are the private entrepreneurs (not legal entities) that banks are targeting most with the digital lending process.
It also requires 3-4 clicks for the customer to find the online application on bank websites. The best result is 2 clicks from the bank homepage (Moneta Money Bank, Garanti BBVA). So, no bank in the region offers an online application for SME loans directly from their homepage. Does this mean that lending to SMEs is not a priority (again), or perhaps this is only the case in 2020?
We discussed the outcomes of the study and examples of digital SME lending processes in more detail on September 15 during our free dedicated webinar.
Watch the recording:
Watch full Webinar Series 2020