fintech digest
Strategic Partnerships Enabling Fintech Lending, Mitigating Against Loan Delinquencies, and more...
Research Team
31 May 2024
Are Strategic Partnerships the Future of Fintech Lending?
Many businesses, especially in their early or high-growth stages, can find it hard to secure funding from traditional sources like banks and venture capital firms. Risk aversion, regulatory restraints and the decline of small and community banks have made the traditional lending approach—walking into a bank with a solid business plan—all but obsolete.
Karmen – French Fintech SME Lender with a Forward-Looking Approach
In this episode we are joined by Karmen's Co-Founder Gabriel Thierry. After seeing first-hand the astronomical growth and success of revenue-based SME lending models in the US, Gabriel and his co-founder Paul seized the opportunity to be the first player to launch a tech-driven RBF lending business in their home country of France. Since launching in 2021, Karmen has provided working capital within 48 hours to over 200 SME borrowers.
How Digital Lenders can Mitigate Loan Delinquency Risks
A multifaceted approach integrating prudent lending practices, intuitive risk management and holistic data aggregation are the cornerstones of effective loan delinquency risk mitigation strategies. Examples of this could be risk-based pricing, covenant insertion, post-disbursement monitoring or limiting sectoral exposure strategies are all acceptable strategies.
It’s also important to leverage modern tools like advanced algorithms and machine learning models to assess borrower creditworthiness accurately. By analysing vast datasets in real-time, digital lenders can make informed decisions, reducing the likelihood of lending to high-risk individuals.
An Evergreen Vehicle Can Be an Important Tool in Private Equity Asset Allocation
Institutional investors have been able to take advantage of the illiquidity premium and diversification benefits of investing a significant portion of their portfolio in private equity for several decades, but we are just starting to see broader adoption among individual investors. Private equity can increasingly useful for these investors at a time when the positive correlation between stocks and bonds is elevated and expectations for future returns are lower.
How Easy Lending Can Lead to Fraud
Traditionally, banks have made the majority of consumer loans. But after the Great Recession, banks tightened lending standards and new companies emerged to fill the gap. By 2023, 14% of personal loans were fintech-issued, according to the Federal Reserve Bank of New York.