Russia has seen a boom in the number of smaller businesses in the last few years. Unfortunately for them, traditional lenders are, by and large, still focused on providing services to medium- and large-sized businesses. While some smaller businesses are able to find financing through traditional lenders thanks to special concessional lending programs, others seek out other options such as taking out an individual loan for their business. Even classic microfinance institutions (MFIs) are not yet systematically important in the country. This has opened the door for FinTechs to step in and fill the void, and there are three types of FinTech sources smaller businesses are looking at:
- Crowdfunding – a platform that allows investors to give directly to a business project in return for products at a later time, this type of investment platform is not the most suitable for smaller business and has been falling in popularity in recent years.
- Crowding – also known as peer-to-peer (P2P) lending, crowding makes it possible for individuals to make loans to other individuals or legal entities via a crowding platform that evaluates loan applications and assigns each one a credit rating.
- FinTech MFIs – FinTech MFIs are typically foreign-run lenders that take advantage of modern technology to assess loan applications and provide financing. Experts predict the growth of this particular segment in Russia will be strong in the coming years.