This paper aims to discuss how Distributed Ledger Technology (”DLT”) solutions may reshape SME Know-Your-Client (”KYC”) and Small and Medium Enterprise (”SME”) Financing.
This paper begins with a discussion on SME Financing pain points. The Proof of Concept (”POC”) addresses fundamental issues through enabling underserved SMEs in digital transformation to facilitate bankability. Individual loan size from SMEs is typically not large and it is therefore not cost efficient for Banks to process each loan application manually. This POC will discuss how the DLT can improve efficiencies for Banks, allowing them to expand into the untapped SME segment.
It is envisaged that a three-layer architecture where an industry distributed ledger network (first layer) forms the foundation to develop and deploy commercial use cases (second layer), supported by the governance network (third layer). This POC, therefore, focused on solving the key pain points face by SMEs. Most desirably, to empower the SMEs with organized digital data and making them bankable.