The collaboration will develop a proof-of-concept that aims to provide transparency and trustworthiness for UAE SMEs’ credit profiles to obtain access and better credit terms to working capital finance.
The SME sector supports the growth and diversification of the UAE economy. Although local SMEs represent 95% of companies in the country and 86% of the private sector’s workforce, they account for only 5% of total bank lending in the UAE. While UAE SMEs’ share of domestic credit leads other countries in the region, it is still well below the levels in developed markets.
UAE SMEs face two key challenges when seeking trade and working capital financing. Firstly, banks face high onboarding and processing costs when handling a loan application. Secondly, banks lack sufficient data on SMEs to efficiently evaluate their credit risk.
The collaboration has grown out of the selection of Finverity as a finalist in the FinTech Abu Dhabi Innovation Challenge 2020, which was announced during the 4th FinTech Abu Dhabi Festival, co-hosted by the Central Bank of the United Arab Emirates. The collaboration addresses the above challenges via a programme designed to collect real-time financial data from the accounting packages of SMEs on the Finverity platform and build credit profiles.
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