SME banking study: Credit process to be simplified for SMEs
Thousands of Small and Medium-sized Enterprises (SMEs) in Switzerland are reluctant to apply for credit despite their financing needs. The main reasons cited are the credit process, which is perceived as lengthy and cumbersome, and high interest costs. The “SME Banking” study published today by the Institute for Financial Services (IFZ) addresses the existing hurdles in the credit process and outlines solutions.
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Untapped potential for optimization
To encourage as many SMEs with financing needs as possible to apply for credit, the study recommends that banks improve customer interaction by enhancing the customer journey and optimizing the entire credit process. The benefits include faster processing times and lower costs. As Swiss Banking explains in a guest article on the study, this strengthens the innovative power and competitiveness of SMEs and thus also the Swiss economy.
A key component is the provision of an online loan application as the basis for a fully automated loan process for SMEs. Currently, only a few banks allow SMEs to submit their loan inquiries and applications online and submit the documents digitally. The integration of online loan calculators, which enable non-binding and anonymous simulations and initial assessments, serves to further reduce barriers to entry. Clear communication of requirements and framework conditions is necessary to reduce abandonment rates on the online channel and further accelerate the application process. Overall, there is considerable potential for optimization.
Increased efficiency through the use of AI
On the banking side, document management and the analysis of SME documents are particularly labor-intensive and time-consuming. In this area, the widespread use of AI can achieve significant efficiency gains, for example through the automated recognition, reading, and classification of information. The use of AI is also conceivable for credit decisions. It could be used in the preparation of decision templates and even to support credit recommendations. AI-automated process steps in the lending business thus enable shorter processing times, more targeted use of resources, and ultimately faster disbursement.
Such solutions for processing information and documents are already in use in the mortgage business, while they cannot be used profitably in SME financing due to the low volumes involved. The authors of the study believe that this untapped potential can be better exploited in the future through the sourcing of IT services. The main beneficiaries of a simplified credit process are SMEs as customers of banks in Switzerland.