Google Pay to launch SME lending feature in India

The multinational tech giant has announced plans to offer loans to small and medium-sized businesses (SMEs) through its Google Pay for Business application and in partnership with financial institutions (FIs), through TechCrunch. Last launched in India year, the application is already used by 3 million SMEs. In addition, the tech giant also announcement google’s small business hub, which will consolidate all Google services related to SMEs on a single platform.

Positioning of Big Techs in financial services

Business Insider Intelligence

The loan functionality is among the many SME related services that Google has launched in India in recent years:

  • Google My Business: This application allows SMEs to create a free company profile, including photos and contact details, which is then listed on the search engine and Google Maps. Companies can constantly post updates to their profiles, which allows them to better connect with customers and promote their offerings.
  • Google Pay location: This Platform allows SMEs to create a customizable digital storefront on the Google Pay application. Customers can then see what the business is selling and make purchases on the platform through Google Pay.

Google’s new lending feature should appeal to potential banking partners in India as it can help them effectively reach millions of SMEs and complement their analytical capabilities.

  • Out of 40 million SMEs in the country, 26 million already use Google services to improve their brand image. Google’s application therefore presents an opportunity for traditional banks to quickly reach more than half of all SMEs in the country with their loan products thanks to the integration.
  • The Google Pay for Business application could also provide banks with more relevant data to assess the creditworthiness of SMEs. The informal nature of Indian SME operations, such as the lack of historical cash flow data, has made banks reluctant to extend credit, leading to a $ 240 billion credit deficit – and to skyrocket digital loans in the country over the past decade, as alternative lenders take advantage of advanced technology to better analyze businesses. For example, ReadyKart uses big data analysis tools and machine learning to analyze multiple data points and paint a more accurate picture of a company’s finances than traditional banking methods. Google’s app could complement banks’ credit scoring methods by providing data on a company’s transaction and sales volumes, for a more complete profile of the potential borrower. We saw it in action with Goldman Sachs, which strengthened both its customer base and its loan origination process by signature a deal with Amazon in the United States earlier this year, allowing it to offer loans to small businesses through the e-commerce giant’s lending platform.

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