Digital Lending Platforms and their Impact on SME Financing

  • Authors

    • Jose Fernandez Technology Consultant, Telefónica, Spain. Author
    • Marta Silva Project Manager, EDP Group, Portugal. Author

    DOI:

    https://doi.org/10.67228/3071642X/IJCFDE-2019PII2R8X

    Published 10-04-2019

  • Digital Lending Platforms, SME Financing, Fintech, Artificial Intelligence, Financial Inclusion, Peer-To-Peer Lending, Alternative Credit Scoring, Digital Banking, Financial Technology, Credit Risk Assessment

    Issue

    Vol. 2 No. 2 (2019)

    Section

    Articles

    How to Cite

    Fernandez, J., & Silva, M. (2019). Digital Lending Platforms and their Impact on SME Financing. International Journal of Commerce, Finance and Digital Economy, 2(2), 01-18. https://doi.org/10.67228/3071642X/IJCFDE-2019PII2R8X

  • Abstract

    Small and Medium Enterprises (SMEs) are key contributors to economic growth, innovation, and employment but often face difficulties accessing credit due to limited collateral, inadequate credit history, and complex banking procedures. Digital lending platforms have emerged as an innovative solution by utilizing technologies such as Artificial Intelligence (AI), Machine Learning (ML), Big Data Analytics, Blockchain, and Mobile Banking to improve credit accessibility and lending efficiency. This study examines the role of digital lending platforms in SME financing, focusing on fintech credit scoring, peer-to-peer lending, digital banking, and automated underwriting. Through qualitative and quantitative analysis of existing literature and industry reports, the research evaluates their impact on loan accessibility, processing speed, cost efficiency, risk management, and financial inclusion. The findings reveal that digital lending significantly reduces financing barriers, accelerates loan approvals, lowers operational costs, and expands financial access, particularly in underserved regions. However, challenges such as cybersecurity risks, data privacy concerns, regulatory issues, algorithmic bias, and digital illiteracy remain. The study concludes that digital lending platforms are transforming SME financing and can support sustainable economic development when supported by effective regulations, strong security frameworks, and inclusive digital finance policies.

  • References

    [1] International Monetary Fund, “FinTech and Financial Services: Initial Considerations,” IMF Staff Discussion Note, vol. 17, no. 5, pp. 1–35, 2017.

    [2] Philippon, Thomas, “The FinTech Opportunity,” National Bureau of Economic Research, Working Paper No. 22476, pp. 1–45, 2016.

    [3] Arner, Douglas W., Barberis, Janos, and Buckley, Ross P., “The Evolution of FinTech: A New Post-Crisis Paradigm,” Georgetown Journal of International Law, vol. 47, no. 4, pp. 1271–1319, 2016.

    [4] Bazarbash, Majid, “FinTech in Financial Inclusion: Machine Learning Applications in Lending,” IMF Working Paper, pp. 1–28, 2019.

    [5] Jagtiani, Julapa and Lemieux, Catharine, “The Roles of Alternative Data and Machine Learning in FinTech Lending,” Federal Reserve Bank Research Department, pp. 1–48, 2018.

    [6] Morse, Adair, “Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending,” Annual Review of Financial Economics, vol. 7, pp. 463–482, 2015.

    [7] Gomber, Peter, Kauffman, Robert J., Parker, Chris, and Weber, Bruce W., “On the FinTech Revolution: Interpreting the Forces of Innovation and Disruption in Financial Services,” Journal of Management Information Systems, vol. 35, no. 1, pp. 220–265, 2018.

    [8] Bank for International Settlements, “Implications of FinTech Developments for Banks and Bank Supervisors,” BIS Publications, 2018.

    [9] Frost, Jon, Gambacorta, Leonardo, Huang, Yi, Shin, Hyun Song, and Zbinden, Pablo, “BigTech and the Changing Structure of Financial Intermediation,” Economic Policy, vol. 34, no. 100, pp. 761–799, 2019.

  • Downloads

Similar Articles

31-40 of 87

You may also start an advanced similarity search for this article.