Digitization Could Hurt Relationship Between Banks and Venture Clients, Specifically Women
Approved bank loans to SMEs has decreased by 15 percent over the last 10 years, and roughly 60 percent of all ventures in need of external financing have reported difficulties in accessing financing for their investments, according to an article by the Harvard Business Review.
Digitization is proving to have a negative effect on entrepreneurs, particularly women, with its elimination of relationship-based lending.
According to the article, “Studies show that women have lower access to capital. And that even when they are approved for financing, they face more demanding credit terms compared to men. The origin of these biases has been linked to gender stereotyping, where men entrepreneurs are perceived as being more ambitious and having more entrepreneurial potential than women.”