DBS Bank on Tuesday announced it has signed cross-referral agreements with two local peer-to-peer (p2p) lending platforms, Funding Societies and MoolahSense - in a first-of-its-kind collaboration between established financial institutions and emerging fintechs (financial technology startups).
The partnership enables DBS to refer to these lending platforms some of the smaller businesses that the bank is unable to lend to.
In return, these lending platforms will refer borrowers who have completed two successful rounds of fund-raising to DBS for larger commercial loans and other financial solutions such as cash management.
"To safeguard borrowers' privacy, the bank and p2p lenders will only share information when they have obtained borrowers' consent in advance," said DBS.
The bank added that historically, small businesses without audited accounts and personal income statements tend to be underserved as banks find it difficult to credit assess them, preferring to lend to companies which can provide collateral and have an established operating track record and at least two years of audited accounts instead.
Said Joyce Tee, group head of SME banking at DBS: "DBS' partnership with Funding Societies and MoolahSense is a good example of how traditional and alternative finance providers can work together to support the funding needs of small businesses."
DBS is believed to be the first Singapore bank to partner p2p lending platforms to serve small businesses.
This article was first published on April 19, 2016.
Get The Business Times for more stories.