Fintech
Fintech, Small Businesses and the American Dream
2024, Book: “Small businesses are the backbone of the U.S. economy. They are the biggest creators of jobs and offer a path to the American Dream. But many have a hard time getting the capital they need to operate and succeed. In Fintech, Small Business & the American Dream, former U.S. Small Business Administrator and Senior Fellow at Harvard Business School Karen G. Mills focuses on the capital needs of small businesses and how technology will transform the small business lending market. This is a market that has been plagued by friction: It’s hard for a lender to figure out which small businesses are trustworthy, and borrowers often don’t know how much money or what type of loan they need. Every small business is different; one day a borrower is a dry cleaner and the next day a supplier of auto parts, making it difficult for lenders to understand each company’s unique circumstances. Today, however, big data and artificial intelligence have the power to illuminate the opaque nature of a small business’s finances and make it easier to access capital to weather irregular cash flows or invest in growth opportunities. Starting in the dark days following the 2008-9 recession and continuing through the crisis of the Covid-19 pandemic, Mills traces how fintech has changed and will continue to change small business lending. In the new fintech landscape, financial products are embedded in apps that small business owners use every day, and data-driven algorithms provide automated insights to determine which businesses are creditworthy. Digital challenger banks, big tech companies, and traditional banks and credit card companies are deciding how they want to engage in the new lending ecosystem. Who will be the winners and losers? How should regulators respond? At this crucial moment, Mills explains how financial innovation and thoughtful regulation can restore a path to the American Dream by improving access to credit for small businesses. An ambitious book that addresses the broad importance of small business to the economy, the historical role of credit markets, the dynamics of innovation cycles, and the policy implications for regulation, this second edition of Fintech, Small Business & the American Dream is relevant to bankers, regulators, and financial technology entrepreneurs and investors; indeed, to anyone interested in the future of small business in America.”