New WEF report written by Oxford Saïd on future potential of fintech

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Fintech Companies Hold the Keys to Close $2 trillion Funding Gap for SMEs

A team of our MBA students spoke to more than 100 CEOs, bank executives and investors to understand the current state of the fintech sector

For immediate release: Monday 26 October 2015

Press Release

Fintech Companies Hold the Keys to Close $2 trillion Funding Gap for SMEs

Saïd Business School, University of Oxford

  • Fintech companies could provide much needed relief for SMEs, helping to close a $2 trillion funding gap for SMEs worldwide, says new World Economic Forum white paper
  • Global Agenda Council on the Future of Finance & Capital report that investment into fintech businesses quadrupled to $12 billion in 2014, up from $4 billion in 2013
  • While many fintech start-ups are in the US and UK, fintech hubs have sprung up in emerging countries

Financial technology companies are leading the way in disruptive innovation in financial services, helping to bridge a $2 trillion funding gap for millions of small and medium-sized enterprises (SMEs) seeking credit to grow their business. This is the conclusion of a white paper released today by the World Economic Forum’s Global Agenda Council on the Future of Finance & Capital.

The paper titled “The Future of Fintech - A Paradigm Shift in Small Business Finance” was written by a team of MBA students from Saïd Business School, Oxford led by Daniel Drummer, under the leadership of members of the Global Agenda Council.

According to the paper, fintech entrepreneurs are disrupting SME financing by offering such tailored services to SMEs as invoice and supply chain financing, equity crowd funding and SME-to-SME lending. It also noted that equity investment into the fintech businesses quadrupled to $12 billion in 2014, up from $4 billion in 2013.

’A team of our MBA students spoke to more than 100 CEOs, bank executives and investors to understand the current state of the fintech sector,’ said Professor Peter Tufano, Dean of Oxford Saïd. ‘The overwhelming consensus is that fintech has successfully started to gain traction in recent years, yet there remains huge further potential for the sector to develop innovative and sustainable solutions to tap the funding gap for SMEs.’

‘Financing for SMEs is lacking although there is an ample amount of cash ready to get deployed’, said Michael Koenitzer, Financial Inclusion Project Lead at the World Economic Forum and Council manager. ‘But in this case fintech disruptors are increasingly filling the gap banks and investors leave. SMEs can turn to them to get the credit needed to grow their business, as fintech is providing a much needed relief to small businesses around the world.’

The need for SME financing is widespread. The UK, Italy, Spain, the Netherlands, Turkey, Nigeria, Morocco, China, Canada and Argentina are among the dozens of countries worldwide where businesses indicate access to finance as a top three concern for doing business, the recent World Economic Forum Global Competitiveness Report 2015-2016 showed, a consequence of the global financial crisis.

‘Small businesses account for more than half of the world’s GDP and two-thirds of all employment,’ said Peer Stein, Director of Finance and Markets Global Practice at the World Bank Group. ‘If fintech can provide levers to help them succeed, we should create the right environment to make this happen.’

In the last decade, innovations in hospitality such as Airbnb or in transport such as Uber have significantly changed paradigms in those industries while drastically improving customer experience. ‘Innovations have always disrupted established industries,’ said Arnaud Ventura, Co-founder of Positive PlaNet Foundation and Founder and Chief Executive Officer of the MicroCred Group. ‘This report looks at how fintech-related innovations could improve SMEs access to finance. We strongly believe that innovations in this field will contribute to improving the state of the world.’

The report makes recommendations to help the fintech sector realise its full potential including collaboration between partners, government incentives, and the creation of a positive and cooperative regulatory environment.

For more information please contact:

Jonaid Jilani, Press Officer,
Mobile +44 (0)7860259996; Tel +44 (0)1865 614678
Email: jonaid.jilani(at)sbs(dot)ox.ac.uk or pressoffice(at)sbs(dot)ox.ac.uk

Josie Powell, Senior Press Officer,
Mobile +44 (0)7711 387215, Tel: +44 (0) 1865 288403
Email: josie.powell(at)sbs(dot)ox.ac.uk or pressoffice(at)sbs(dot)ox.ac.uk

Notes to Editors

1.    About Saïd Business School
Saïd Business School at the University of Oxford blends the best of new and old. We are a vibrant and innovative business school, but yet deeply embedded in an 800 year old world-class university. We create programmes and ideas that have global impact. We educate people for successful business careers, and as a community seek to tackle world-scale problems. We deliver cutting-edge programmes and ground-breaking research that transform individuals, organisations, business practice, and society. We seek to be a world-class business school community, embedded in a world-class University, tackling world-scale problems.

In the Financial Times European Business School ranking (Dec 2014) Oxford Saïd is ranked 10th. It is ranked 10th worldwide in the FT’s combined ranking of Executive Education programmes (May 2015) and 22nd in the world in the FT ranking of MBA programmes (Jan 2015). The MBA is ranked 7th in Businessweek’s full time MBA ranking outside the USA (Nov 2014) and is ranked 5th among the top non-US Business Schools by Forbes magazine (Sep 2013). The Executive MBA is ranked 2nd worldwide in the Economist’s Executive MBA ranking (Sep 2015) and 9th worldwide in the FT’s ranking of EMBAs (Oct 2015). The Oxford MSc in Financial Economics is ranked 14th in the world in the FT ranking of Masters in Finance programmes (Jun 2015). In the UK university league tables it is ranked first of all UK universities for undergraduate business and management in The Guardian (Jun 2015) and 2nd in The Times (Sept 2015). For more information, see http://www.sbs.ox.ac.uk/

2.    About the World Economic Forum Network of Global Agenda Councils

The World Economic Forum’s Network of Global Agenda Councils is the world’s foremost interdisciplinary knowledge network dedicated to promoting innovative thinking on critical global issues, regions and industries, and incubating projects, campaigns and events for the public good.

More information about the Summit on the Global Agenda 2015 is available here: http://wef.ch/gac15

ENDS

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Jonaid Jilani
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