FILE PHOTO: A man walks past the Bank of England in the City of London, Britain, February 7, 2019. REUTERS/Hannah McKay//File Photo
June 20, 2019
LONDON (Reuters) – The Bank of England said on Thursday it will lay the groundwork for a new platform to help small companies get loans by having key underwriting data in one place.
“It is not for the Bank of England to build this platform but we can help lay some of the groundwork,” Carney said in a speech in London’s Mansion House.
Lenders would be able to access credit and other data held on companies on the platform to speed up lending.
Small and medium-sized enterprises (SMEs) employ 60% of the private sector workforce and contribute half of British GDP, the BoE said. There is a 22 billion pound funding gap in the SME loan market, the BoE said.
A problem for small firms is that the assets they are seeking to borrow against are increasingly intangible – like a brand or user base – rather than physical machinery or buildings, Carney said.
This makes decisions on a loan by a bank trickier.
“This should not be the case in a data-rich world. Lenders should be able to access a broader set of information on which to base credit decisions,” Carney said.
SMEs could create a “portable credit file” drawing on sale, trading and other data from their business which could then be shared with a wide range of competing lenders through a national SME financing platform.
Linking public sources such as the Passport Office, tax authorities, and the companies registration office could vastly improve the task of underwriting loans, the BoE said.
But Margaret Doyle, a financial services industry partner at consultants Deloitte, said the first challenge will be to make sure there is a standard set of data and to make clear what a credit file actually looks like.
“The second challenge is to make sure that all of the data, which is obviously highly sensitive, is properly protected and secure,” Doyle said.
The identification of businesses and verification of their data will be crucial to making this work, the BoE said.
(Reporting by Huw Jones and David Milliken, editing by Hugh Lawson)
