Want to lend but afraid of difficulty in debt collection

Small and micro enterprises are facing great difficulties in accessing credit. Fintech… is considered a new way for enterprises to solve the capital problem. However, many fintechs said they are facing difficulties in debt collection.

Fintech becomes a new capital channel for small businesses: Want to lend but afraid of difficulty in debt collection

Small and micro enterprises are facing great difficulties in accessing credit. Fintech… is considered a new way for enterprises to solve the capital problem. However, many fintechs said they are facing difficulties in debt collection.

Small businesses and households still have difficulty accessing capital

Speaking at the National Financial Inclusion Strategy Seminar: Creating Access to Capital for Small and Micro Enterprises, organized by Nhan Dan Newspaper and the Institute of Digital Economic Development Strategy (IDS) this morning (October 25), many experts affirmed that access to capital for small and micro enterprises is currently facing many difficulties. Fintech companies can resolve this concern.

Expert speaking at the Seminar on National Financial Inclusion Strategy: Creating Access to Capital for Small and Micro Enterprises.

“The biggest obstacle in the story of accessing capital for small and medium enterprises is the ability to meet the conditions and standards of financial and credit institutions. Banks have a high risk appetite so they are not interested in lending to these subjects. Meanwhile, fintechs - once they apply technology to assess risks and appraise customers, are willing to lend. This is an important solution to open up capital flows for small and micro enterprises,” said Associate Professor, Dr. Dang Ngoc Duc, Head of the Faculty of Finance and Banking (Dai Nam University).

According to IDS research, Vietnam is one of 25 countries that prioritize the development of financial inclusion. However, after nearly 5 years of implementing the National Financial Inclusion Strategy to 2025 and vision to 2030 (Strategy), access to capital for disadvantaged individuals and businesses (small and micro enterprises) still faces many difficulties.

IDS believes that to accelerate financial inclusion, international experience is to implement digital transformation policies and apply technology to financial services (fintech) to realize the goals of the financial inclusion strategy. Vietnam is not only behind other countries in terms of credit access, but also has a large market size (nearly 100 million people), so without a breakthrough solution, it will be difficult to accelerate financial inclusion.

“World best practice shows that the application of technology helps banking and financial services to be provided anywhere, even without the presence of banks. As a result, barriers to financial inclusion such as income, costs and geographical distance are almost eliminated, helping the poor and low-income people - those who have never had access to financial services before - to have more favorable conditions to access and use financial services,” said Dr. Tran Van, Director of IDS.

Deputy Governor of the State Bank, Mr. Dao Minh Tu also affirmed that digital finance will help optimize services, while improving management efficiency and access to capital for vulnerable groups. Along with that, there needs to be close cooperation between commercial banks, microfinance institutions and credit funds to build financial services that suit the needs of people and businesses. At the same time, the legal framework must also ensure transparency, helping financial institutions operate smoothly and protecting the rights of financial service users.

Finhtech: Want to lend but have legal problems, difficult to collect debt

The demand for loans from small and micro enterprises and households is very high, which means that the potential for the development of the digital financial market is huge. Fintechs possess great potential for development thanks to advantages in technology, data, operating costs, business opportunities, etc., which are considered the driving force for implementing the current national financial inclusion strategy.

According to Associate Professor Dr. Dang Ngoc Duc, fintech is a key solution that not only helps increase access to credit for small and micro enterprises, but also increases convenience and enhances management capacity for small enterprises. However, the biggest problem today is that the legal framework is still inadequate and does not meet practical requirements, especially

Mr. Mai Danh Hien, General Director of EVN Finance, said that currently, legal regulations have created favorable conditions for digital transformation activities in the financial and banking services sector. However, among the 26 financial companies today, almost none of them lend to the business segment, mainly consumer loans to individuals.

EVN Finance is one of the financial companies with many products aimed at lending to small business and household customers. However, Mr. Hien said that digital financial companies themselves are currently having a headache with the situation of "debt explosion" as well as the situation of fraud and impersonation of financial companies to commit fraud. Debt collection is very difficult because these companies lack human resources while the market lacks intermediary debt collection units.

Mr. Nguyen Thanh Hien, General Director of Finviet Technology Joint Stock Company:
The emergence of fintech has changed the way small businesses and households access financial services, providing them with low-cost financial services. Digital financial platforms have contributed to accelerating financial inclusion.

Despite its huge potential, fintech is facing many obstacles, especially legal ones.

Dr. Nguyen Duc Kien, former Deputy Chairman of the National Assembly's Economic Committee and former Head of the Prime Minister's Advisory Group, said: "Risk issues can be resolved through cooperation between traditional financial and credit institutions and fintech partners (non-competitive, cooperatively filling market gaps... The biggest problem now is the legal framework, but this is within the reach of the management agency. Instead of having to spend tangible resources, the State can cooperate to develop using intangible resources, which is to build a suitable legal framework for the development of technology application activities in general and fintech in particular."

It is known that many countries in the region have many policies to turn fintech into a capital channel for small and micro enterprises. For example, India has developed a network of banking agents with the goal of expanding financial services to rural areas, supporting small and medium enterprises. The number of small and medium enterprises using banking agents has increased by 25% in the past 5 years.

Indonesia also started allowing the agency banking model in 2013, where commercial banks partner with non-banking organizations to provide services to the community. To support fintech, the Central Bank of Indonesia has created a regulatory framework to test various solutions for micro-enterprises.

Source: https://baodautu.vn/fintech-thanh-kenh-dan-von-moi-cho-doanh-nghiep-nho-muon-cho-vay-nhung-so-kho-doi-no-d228328.html