Automation can minimise SME lending risks

Experian advocates automated lending and credit scoring for SMEs to help lenders manage risk in Asia.

Evaluating the default potential of small and medium-size enterprises SME can be difficult and lengthy, and can lead to undue risks for both the lender and borrower, says Nigel Rusby, a principal consultant on the global consulting team of Ireland-based Experian.

According to Rusby, there is a growing realisation among lenders that the manual processes typically used when lending to SMEs are harmful to both sides of the transaction, and that automation can offset those risks.

“Bad debt rates have risen sharply across most lending segments since the global financial crisis,” he said. “This illustrates two clear issues loss forecasting is inadequate under these conditions, and secondly, reliance...

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