By Kevin Tweddle

In the U.S. small businesses abound, generating two out of three net new jobs in the U.S. annually and comprising the lion’s share of all businesses, according to the U.S. Small Business Administration.  For a community bank, these small-to-medium enterprises (SMEs) represent a strong opportunity in loan origination; in 2017, 29 percent of small businesses indicated they used bank loans to meet their capital needs.

As community banks look to deepen their SME lending relationships, they also must contend with new market entrants, including online lenders. In fact, research firm S&P Global predicts that SME-focused digital lenders will grow at an estimated CAGR of 21.5 percent by year-end 2021, presenting a unique opportunity for local lenders to pair with fintech companies to create a seamless online user-centric experience.

“In our organization, we are always looking for ways that we can better compete with non-bank providers by offering online services, faster resources to borrow money, and ways to keep the communication stream safe and fluent,” says Marty Sellars, president and CEO of $500 million-asset FNBC Bank in Ash Flat, Ark. “The Accelerator participants offer cohesive solutions to meet those needs.” 

Take, for example, ThinkTECH Accelerator finalist CRiskCo, which offers community banks a credit risk analysis and management platform solution that helps streamline the lending process for businesses of all sizes. To do this, the Tel Aviv, Israel-based fintech provides an interface with a businesses’ accounting platform, explains company CEO Erez Saf.

Using machine-learning algorithms, CRiskCo’s solution extracts and pre-populates required customer information. The platform then leverages artificial intelligence (AI) technology to generate a credit score for the applicant, complete with a predictive loan repayment analysis. This information is then filtered into a quick-reference dashboard for the bank.

CRiskCo’s technology equips banks to offer a user-friendly process on the front-end for the customer and a simplified decisioning solution behind-the-scenes for the bank, Saf says, noting the company’s solution can cut the underwriting process from 21 days down to a few hours. 

“CRiskCo simplifies the communication between community banks and small businesses. By removing the time-consuming process of collecting financial reports, CRiskCo helps emphasize and strengthen their relationships and allows community banks to focus on the content and not the bureaucracy,” Saf says.

The international company has live products with the Queensland government in Australia. In Europe, they are working with credit insurance company, Euler Hermes, and they also have an agreement with BBVA, a Spain-based international bank with a major foothold in Latin America. CRiskCo also will be announcing a relationship with a U.S.-based, first-tier, international credit card provider later this year.

In the near future, CRiskCo hopes to begin talks with community bank core providers about integrating its technology into infrastructure directly, because the company believes community banks are best positioned to support small business needs.

“The majority of small business relationships are with the community bank,” notes Saf. “Community banks, because of this existing relationship, are able to help small businesses get access to credit faster and make new vehicles accessible to these small businesses.”

For community banks, that personalized relationship opens doors to new possibilities. And, having a mechanism to optimize the loan origination process allows them to increase funding to new businesses, and ultimately, extend their support to the local economy. Fortunately, it’s CRiskCo’s mission to help community banks do just that.

Kevin Tweddle is chief operating officer of the ICBA Services Network.