The business lending platform Opyn, the first of its kind launched in Italy in 2015, disbursed €752 million in 2022 with the number of credit applications received by the platform more than doubling from 7,230 to over 16 thousand and 2,395 companies financed from 1275 in 2021, for an average loan of €313,000.
The disbursement was distributed to companies operating mainly in manufacturing (25 percent), followed by wholesale (17.4 percent), retail (16 percent), and construction (15 percent), mainly in Lombardy (19.6 percent), but with a strong presence in the South: Campania (18.4 percent), Lazio (13.7 percent) and Sicily (9.8 percent).
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The Italian fintech financing market and the global market
According to Bebeez’s annual report, disbursement to Italian SMEs through fintech lending, supply chain finance, and equity crowdfunding platforms has exceeded €5.2 billion, bringing the overall total since the market began in 2016 to more than €14.3 billion. BeBeez also calculated that €3.5 billion had been disbursed in 2021 and only €2.4 billion in 2020.
However, it should be kept in mind that these are absolute numbers, which do not take into account any line repayments that occurred during the year by the funded companies themselves.
These are also interesting numbers when compared with the global market: research by Acumen reveals, for example, that the size of the lending market is a total of $82.3 billion, of which 20 percent is in business lending. So we are talking about just under $17 billion, which indicates the relative weight of Italy in the international context.
An established system that can provide new assets to traditional finance
The role of digital finance would thus seem to be increasingly central to SMEs’ strategies. A market that financial institutions can land on if they integrate with fintech companies.
One pioneering example is Opyn’s agreement with Banca Valsabbina, which leverages fintech technology to provide financing to local SMEs in software-as-a-service mode. Using Opyn’s technology, the bank performs the assessment of the creditworthiness of SMEs and the subsequent stages of disbursement, management, and monitoring of credit and related collateral.
Opyn’s technology is based on AI and machine learning systems that enable it to make secure assessments, identifying the riskiest credit applications. And this is possible through granular and automated analysis of a huge amount of data, of which balance sheet data is only the tip of the iceberg.
Alternative sources of data, such as the flow of payments to creditors and suppliers, web and social presence, and a final step based on a face-to-face meeting with the entrepreneur make it possible to assess the creditworthiness but also the environmental and social sustainability of each business.
In this way, Opyn is able to provide credit even to businesses that are normally discarded by the traditional financial system, due to size or geographic location, parameters on the basis of which they are assigned a higher risk index and banks are required to set aside more prudential capital.
The benefits of deep integration with fintech for traditional finance
Opyn believes that, therefore, digital lending platforms should and can become technology enablers.
The advantages of integration with fintech for banks are several:
the technologies offered by the platforms generally require no effort to install: in Opyn’s case, it is a fully modular, plug-in software that requires no intervention in the financial institution’s tech architecture.
The UX and UI (the user experience) that is achieved through this integration is curated and up-to-date; moreover, it can be customized with the client bank’s visual identity, so that the business using the service does not feel catapulted into a different and foreign environment;
Fintech companies offer traditional financial institutions an approach characterized by continuous and rapid innovation of products and services
Finally, economic efficiency can be improved: with technology, the costs of operations that the bank normally has to perform to execute a credit process are lowered.
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First published in Crowdfunding buzz, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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