Digital technology has made universal financial inclusion for small and medium-sized enterprises (SMEs) achievable for the first time, according to speakers at an Asian Development Bank-organized webinar today.
At the webinar, titled Enabling and Expanding SME Financing through Digital Transformation — The Experience of the People’s Republic of China (PRC), participants discussed how the rise of the big tech platforms, big data, artificial intelligence, cloud computing, and other digital technologies offer new avenues of financing for SMEs, which have been particularly hard hit during the coronavirus disease (COVID-19) pandemic.
“A recent survey by ADB and the ADB Institute found that SMEs in all observed countries reported a lack of working capital as the top-ranked concern to retain their business, and had difficulty in raising funds during the pandemic,” said ADB Vice-President for East Asia, Southeast Asia, and the Pacific Ahmed M. Saeed, who moderated the event. “Digital financing is leading to a convergence and equalization of access to financing across the PRC and spurring entrepreneurship, employment, and income generation opportunities, especially in rural areas of its inland regions.”
The two leading mobile payment providers in the PRC now serve about 1 billion customers each. The new big tech lenders each provide about 10 million loans a year to microenterprises and individuals.
But with these changes come new challenges, including the issues of the monopoly power of big tech companies and the more transmittable financial risk. To ensure a healthy expansion of digital financial inclusion for SMEs, these challenges require effective responses from both the government and regulators, participants heard.
Guest speaker was the Sinar Mas Chair Professor of Finance and Deputy Dean of the National School of Development and Director of the Institute of Digital Finance (IDF), Peking University, Yiping Huang. Other speakers in the webinar were ADB Board Director for the PRC Zhijun Cheng; ADB Chief Economist Yasuyuki Sawada; Director of ADB’s Public Management, Financial Sector, and Regional Cooperation Division in the East Asia Department Emma Fan; ADB’s Chief Finance Sector Group Junkyu Lee; and IMF Senior Economist Longmei Zhang.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.