IT and Fintech Enter Financial Industry... Targeting SME Financial Market

[Asia Economy Reporter Song Seung-seop] IT fintech companies entering the financial industry are targeting the small and medium-sized enterprise (SME) financial market. Their strategy is to provide various financial services to small and medium-sized business owners who find it difficult to get loans due to lack of financial transaction history or who have been receiving high-interest loans.

According to Winkstone, an online investment-linked finance (OnTu) company, the ‘E-commerce No.1 JSD’ and ‘Mobility No.1 and No.2’ products launched this year sold out immediately upon release. These two products invest in online retailers or platform-based mobility companies.

Winkstone uses a model that examines the borrower’s repayment ability based on sales trends and future cash flow analysis before executing loans. Funding is provided within the limit of the expected free cash flow.

Kwon Oh-hyung, CEO of Winkstone Partners, emphasized, “Even if growth potential is high, an increasing number of small business owners who lack collateral are unable to get loans from commercial banks or first-tier financial institutions and turn to high-interest loans such as private loans. We will accelerate the design and development of mid-interest financial products targeting SMEs.”

Naver Financial has been working to build a financial supply chain for SMEs through smart store business loans launched in December last year. The smart store business loan is an unsecured credit loan product provided to store operators in collaboration with Mirae Asset Capital and Woori Bank. So far, loans averaging about 27 million KRW per case have been executed at an average annual interest rate of 5.1%.

The proportion of business operators approved for loans under favorable conditions through this system is about 60%. This is the result of applying Naver Financial’s proprietary Alternative Credit Scoring System (ACSS) to ‘thin filers’ (those with insufficient financial history) and SMEs who were previously marginalized in the business loan market. The total loan approval rate was reported to exceed 50%.

Existing financial companies are also launching related services. Hyundai Capital introduced two types of advance settlement services for 11st’s e-commerce factoring, a support service for small online sellers. The newly added services are ‘Automatic Advance Settlement,’ which automatically settles 80% of sales daily, and ‘Future Advance Settlement,’ which predicts up to six months of future sales and pays it in a lump sum. The core is to provide financial benefits to 11st sellers by using non-financial data such as sales items and buyer reviews in credit evaluation. Hyundai Capital plans to continuously expand the service scope from sole proprietors to corporate businesses in the future.

This content was produced with the assistance of AI translation services.