Tide to help SMEs close the credit gap

Hyderabad: UK-based financial technology company Tide, which operates its Global Development Center (GDC) in Hyderabad, is expected to serve India’s growing small and medium-sized enterprise (SME) sector of 64 million people, with a combination services that will help meet their diverse needs. Needs. These include the neobank, to address banking and financial services as well as the credit deficit that small businesses face. A neobank is a kind of digital bank without branches. Rather than being physically present in a specific location, it is completely digital. SMEs need access to financial products and services, and the neobank is at the forefront of meeting their needs and demands. There are over millions of small and medium businesses across India, but only a small portion of them can access payment tools, disbursements, and other vital processes.

Neobanks, with their custom platforms and artificial intelligence and machine learning algorithms, underpin the ‘new credit’ segment, thereby closing the credit gap for SMEs and helping them disburse quickly loans without or with a minimum of paperwork. By 2025, the neobank is expected to occupy a significant share of the SME lending market. Gurjodhpal Singh, CEO of Tide (India), told Telangana Today: “Tide is currently in the Alpha phase and we are trying to create a product that will not only offer business accounts and related banking services, but a full set of solutions. highly usable administrative systems. like billing, expenses and payroll. Not only by supporting the organized SME sector, Tide will also focus on serving the unregistered and unorganized sector, helping small businesses to digitalize and integrate them into the mainstream. “

The needs of SMEs around the world are broadly universal, with time spent on banking and administrative operations being a key issue. “Tide’s agile structure and globally unified technology – One Platform Concept – means the enterprise financial platform can be tailored and integrated with local product service partners to meet the specific needs of businesses in each market. Singh added.

The challenges SMEs face

In terms of digital maturity, India ranks ninth in the small and medium business segment of the Asia-Pacific region (according to the Cisco India SMB Digital Maturity Study 2020). “The path to digitizing SMEs is far too complex for anyone to walk alone; there are several challenges ranging from the lack of skills and access to talent, to the lack of technologies adapted to the companies necessary for an overhaul, ”he added. Lacking a reliable credit methodology for small and medium businesses, getting their first business loan is their biggest challenge. Unlocking their first line of credit and taking out credit are interdependent and, in a traditional banking ecosystem, SMEs continue to struggle with this situation as they have to produce collateral to qualify for credit or end up paying interest rates. raised to unorganized lenders.

Unit economy

He further noted that most traditional financial institutions are struggling, as the unit economy does not favor penetration into the SME segment. Despite an excellent unit economy for individuals and businesses, traditional banks find it difficult to serve SMEs due to lower margins, operational costs and higher risk / underwriting. The fact that the costs often exceed the revenues generated results in SMEs being underserved as a segment.

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