NextGen Credit Scoring: Unlocking SME Finance through AI and Alt Data
2024 Theme
Small and medium enterprises (SMEs) are the backbone of economies worldwide, accounting for over two-thirds of global employment and playing a critical role in job creation and economic resilience. However, persistent financing gaps limit their potential to drive inclusive growth and recovery from economic shocks.
The G20 Global Partnership for Financial Inclusion (GPFI) MSME Action Plan provides a timely framework to address these challenges, fostering resilience and innovation among SMEs while aligning with sustainable development goals (SDGs). The Global SME Finance Forum, an official side event of the G20 South African Presidency, will present GPFI’s comprehensive roadmap to address the systemic barriers hindering SMEs’ access to finance.
G20 MSME Action Plan: Financing and Policy Enablers
Resilient Value Chains: Strengthen sustainable sourcing, fair labour practices, and circular economy models to future-proof SMEs against disruptions.
Tailored Financial Solutions: Provide customised financial tools to promote the financial health and stability of micro and small enterprises.
Scaling Success Stories: Highlight examples of SMEs achieving growth through innovative financing models and sustainable business frameworks.
Digital Innovation: Powering SME Growth and Global Competitiveness
Value Chain Integration: Highlight success stories of SMEs scaling through digital integration, such as streamlined supply chains or cross-border e-commerce platforms.
Global Reach: Equip SMEs with technology to compete internationally, from cloud based accounting systems to AI-driven market analytics.
Empowering SMEs in Sustainability, Resilience and Growth
Policy Reforms: Promoting policies that facilitate working capital, trade finance, and digital payments while supporting financial technologies that simplify SME operations.
Public-Private Partnerships: Encouraging collaboration between governments, financial institutions, and private sector stakeholders to mobilize resources, mitigate risks, and scale impactful solutions
Synopsis:
Access to finance remains a persistent barrier for women-owned and informal SMEs across emerging markets. Traditional credit scoring methods often exclude first-time borrowers, informal workers, or entrepreneurs - disproportionately women - due to lack of collateral or formal financial histories. However, a new generation of fintechs is using AI-powered credit scoring models and alternative data - such as mobile money, transaction history, utility bills, and behavioral indicators - to assess creditworthiness more inclusively. This panel built on a recent IFC scan of the global landscape of alternative credit scoring models, coupled with borrower-level data analysis, to explore gender-differentiated outcomes and examine how the use of AI and non-traditional data expanded credit access and changed how financial institutions provided credit for women-owned MSMEs.
The session explored how these models worked in practice, what challenges remained, and what policy, infrastructure, or partnerships could help scale their impact - especially to reach more informal businesses.
Speakers:
Meghan McCormick, Co-founder & Chief Executive Officer, Oze
Munir Duri, Founder & Chief Executive Officer, Kifiya
Natasha Jethanandani, Co-founder & CTO, Kaleidofin
Moderator:
Namita Datta, Principal Economist, International Finance Corporation