NAVER Smart Store Loans Boost SME Transactions by 97.9 %, Sales Volume by 261.1%
NAVER Smart Store Loans Boost SME Transactions by 97.9 %, Sales Volume by 261.1%
NAVER Smart Store Loans Boost SME Transactions by 97.9 %, Sales Volume by 261.1%
- NAVER TechFin Report 2021 proves effectiveness of Smart Store Business Loans and NAVER Pay’s Buy Now Pay Later service, both designed for the financially underserved
- SMEs that took Smart Store Business Loans see a 97.9% increase in transaction amounts and 261.1% growth in the number of products sold compared to those who did not
- Buy Now Pay Later (BNPL) service is in high demand among thin-filers by relieving short-term cash shortage
2022-02-18
NAVER Financial today published its NAVER TechFin Report 2021 that highlights the financial impact of its techfin services, designed for those underserved by traditional financial institutions including online small- and medium-sized businesses (SMEs).
In the report, NAVER Financial’s Smart Store Business Loan program was found to have a practical and positive impact on SMEs’ sales and growth. In addition, NAVER Pay’s Buy Now Pay Later (BNPL) service was found to be beneficial to thin-filers who lack financial history and are considered financially disadvantaged. The report suggested that expanded service offerings such as partial payments or limit increases can enhance financial inclusivity.
NAVER TechFin Report 2021 includes a study on ‘Smart Store Business Loans for Online SMEs,’ conducted by Professor Choi Hyung-suk of Ewha Womans University School of Business and researcher Park Jae-sung of the Korea Small Business Institute (KOSI), as well as a study on ‘BNPL Services for Thin-Filers,’ by Professors Kim Woo-jin and Kim Jun-bum of Seoul National University School of Business. The reports suggested that both techfin services are providing greater access to financial services.
SMEs with Smart Store Business Loans saw increase in transaction volume and number of products sold
Professor Choi Hyung-suk and his team at Ewha Womans University found that NAVER Financial’s Smart Store Business Loan service has had a positive impact on SMEs’ sales and business growth. The service is designed for online SMEs that are not eligible for traditional bank loans due to not having a physical sales location to serve as collateral or having insufficient sales volume and short business operation periods. Professor Choi’s team concluded that since the loan program is still in its infancy and has only been in service for just over a year, it may help more businesses grow faster over time as the number of loan applicants increases.
The team analyzed data from 4,336 Smart Store sellers for seven months between December 2020 and June 2021, and studied how the loan service has contributed to stores’ sales and business performance. They assessed Smart Stores’ performance based on the volume of sales, which is one of the representative indicators of a business’ activity status.
The study found that businesses that took a loan saw an average of 97.9% growth in total transaction amounts and 261.1% growth in the number of products sold when compared to those that did not. If other businesses without loans also used the loan service, the total transaction amount would grow by 236.4% and the volume of products sold by 153.8%. In conclusion, the loan service has had a positive effect on the growth of total Smart Store transactions, and the increase in the number of products sold was much higher for businesses that took a loan. Based on the study results, the increase in transaction amounts are higher for businesses who accept financial aid, and there are many online SMEs that can benefit from the techfin service. The advantage of taking a business loan is expected to be more significant when the terms and conditions of loan is better designed to cater to SMEs’ business needs.
“Since the Smart Store Business Loan program utilizes an alternative credit scoring system (ACSS) using non-financial data, this kind of loan service is expected to offer SMEs more opportunities for growth,” the research team said. “Through active cooperation between financial and non-financial institutions to further develop alternative credit assessment systems, the range of financial services for SMEs will diversify.”
BNPL in high demand among thin-filers; call for expanded services including partial payments and increased limits
Professor Kim Woo-jin and his team at Seoul National University highlighted that there has been no formal research on domestic thin-filer* financial status and consumption behavior or their demand for BNPL services. The team surveyed 1,650 people—including 1,063 thin-filers—to analyze thin-filers’ traits and the role of BNPL services, and reported on the takeaways to achieve more inclusive financial services for the people who have little or no credit history.
According to the research, thin-filers tend to have a more unstable employment status and have difficulties predicting future income. In comparison to fat-filers with more financial track records, thin-filers lack alternative payment options when cash is short. As a result, BNPL services that offer short-term credit payments were found to be more helpful to thin-filers.
A survey of 329 people who have used a BNPL service also found that there is a demand for more diverse services, such as payment benefits, a wider range of supported vendors, partial payments and limit increases. The report suggested that the addition of a partial payment service — which many major overseas BNPL services offer as the main payment method — will help increase demand for the service itself.
“Smart Store Business Loan and Naver Pay BNPL service both offer more accessible financial services to online SMEs and thin-filers using ACSS** equipped with various non-financial data, machine learning algorithms, AI and big data technologies,” said Professor Kang Hyoung-goo of Hanyang University, who led the study for the NAVER TechFin Report 2021. “Through innovations enabled by technology and data, we are looking forward to seeing more sustainable financial infrastructure and service models with a focus on financial inclusivity.”
*Thin-filers are defined as those without any credit card usage over the past two years or any history of loans over the past three years. Given the ease of credit card issuance in Korea, this study considers thin-filers as those who do not own a credit card or have a usage limit of KRW 3 million or less.
**NAVER Financial Alternative Credit Scoring System (ACSS) is a credit scoring system developed internally by NAVER Financial, which utilizes not only financial information by credit bureaus but also non-financial information. NAVER Financial uses the system to assess applications for Smart Store Business Loans and its BNPL service. For Smart Store Business Loan eligibility, NAVER Financial evaluates the applicant’s financial information, along with total sales, repurchase and return rates as well as customer service response rates, and non-financial information like NAVER Pay payment history for BNPL. ACSS is only used to give applicants positive results such as authorization and limit increase.
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