33% of SMEs Fail – Here’s Why - Issue #442

Digital payments are reshaping the lending landscape with enhanced security and speed, a theme thoroughly examined at the Global Fintech Fest 2023. This session brought together industry experts including Hemant Kshirsagar of FinTech Consulting, Bain & Company, and Co-Founder of India FinTech Diaries; Sajish Pillai, Managing Director and Head of Assets and Strategic Alliances at DBS Bank India's Consumer Banking Group; Rupesh Kumar, Co-Founder of OneCard; Anil Singh, Country Head of Credit Cards and Merchant Acquiring at Yes Bank; Prashant Sodhani, Senior Product Head at National Payments Corporation of India; and Vikrant Bangia, COO of Paytm. The discussion delved into the transformative role of digital payments in the lending sector, focusing on the aspects of security and efficiency.

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Celsius Network, a fintech lender embroiled in fraud allegations and bankruptcy last year, has received court approval to reorganize into a debt-free company with a $1.25 billion balance sheet. The new entity, owned by creditors and managed by Fahrenheit LLC, aims to generate revenue through cryptocurrency staking, following the controversial downfall of its 'high-yield' crypto-based operations and the arrest of its founder.

Fintech industry experts are observing the impact of the White House's executive order on artificial intelligence, confident in their ability to adapt to its extensive requirements. President Biden's order demands detailed records from creators of advanced AI models, including training sessions and cybersecurity tests, especially for AI posing risks to security, economic stability, or public health. It also mandates purchasers of these models to report their acquisitions and comply with new standards in cybersecurity, data privacy, and anti-discrimination.

The United Nations Development Programme (UNDP), along with the Monetary Authority of Singapore (MAS) and other partners, launched the Universal Trusted Credentials (UTC) initiative to enhance financing access for micro, small, and medium-sized enterprises (MSMEs). This initiative aims to create a trusted framework using both traditional and alternative data sets to assess the financing worthiness of MSMEs, focusing on capacity building and improved data access in emerging markets. It represents a significant shift towards data-driven solutions for MSME financing, especially in cross-border contexts.

EduFi, a fintech platform, has launched a digital student loan service in Pakistan, announcing a $6.1 million funding round for its "Study Now, Pay Later" model. Targeting a market where 40% of students attend fee-paying schools, EduFi aims to broaden access to education financing. The platform, featuring a proprietary credit scoring model using AI and machine learning, expedites the loan process and offers enhanced accessibility, addressing the country's significant challenges in education and economic growth.

Indonesia's Financial Services Authority (OJK) plans to lower maximum interest rates for fintech microfinance, reducing them from 0.4% per day to 0.3% in 2023, and further to 0.1% by 2026. This initiative aims to protect borrowers and shift focus from consumer to business lending, particularly benefiting micro, small, and medium enterprises. The move is part of a broader strategy to grow the fintech sector and increase productive loans by 2028.

The surge in smartphone use among urban youth has led to a 100-fold increase in FinTech NBFC lending to young borrowers (below 35) from 2015 to 2021, as reported by CAFRAL. These fintech lenders, focusing primarily on personal-use loans, now account for 70% of lending to this demographic, surpassing traditional banking due to easier access and the rise of digital lending platforms.