Nine out of 10 medium-sized German industrial companies would find a financial model more desirable with loan conditions being determined by data.
Therefore, loan conditions are not determined by historical financial ratios and available collateral but by data that substantiates the performance of the investment.
This is according to a survey from German digital SME financier creditshelf, which quizzed over 250 board members and managing directors.
Board member and founding partner of creditshelf Daniel Bartsch said: “More and more business leaders recognize the advantages in granting insight into current production numbers, in order to receive better credit conditions.
He said two years ago 15% of decision-makers had spoken out against disclosure of the data but in 2019, just 2% were against it.
He added: “Medium-sized companies in particular are benefiting from increasingly networked production facilities that provide precise real-time data on capacity utilization and profitability.”
Dirk Schiereck accompanied the study scientifically and said companies expect greater flexibility from banks and financial service providers. “In recent years, SMEs have had to demonstrate enormous adaptability and face rapid changing market conditions.
“Digitisation is progressing inexorably, and lenders must also face up to this reality. In many cases traditional calculation methods and key figure analyses are no longer up to date.”
Bartsch said: “Industry 4.0 is no longer a slogan, but a living reality in many companies. The banking industry must respond to this and offer the possibilities of modern financing.”
Flexibility with credit models means you can react faster to different market situations like if an order becomes weaker at short notice, creditshelf noted.