BIS Research Finds in Favor of Fintech Small-Business Finance
In sharp contrast to much earlier U.S. research, a new BIS study strongly supports alternative small business-lending fintech credit-scoring processes and market depth, concluding that fintechs expanded credit access to underserved small business owners. The study compares U.S. proprietary loan-level data from two fintech SBL platforms with Federal Reserve data between 2016 and 2019, finding that fintechs better predicted loan performance than banks. Fintechs served borrowers less likely to receive credit from banks, lending more in zip codes with higher unemployment rates and higher business bankruptcy filings.