This publication describes the journey towards digital transformation that financial institutions are gradually embarking onto. Its aim is to help demystify this growingly complex technological question, rife with buzzwords and new concepts. The main focus is on meaningful and practical aspects for FIs in transition economies, respectively in Central Asia.

In this paper, we take a closer look at the advantages of and conditions for separating different functions in crediting small and medium enterprises (SMEs). The purpose is to give financial institutions some food for thought on how they could, if indicated, optimize organizational structure, processes, procedures and staff requirements used to finance SMEs.

Recent surveys of demand for SME loans confirm that access to finance is not always the main problem. Over the past few years, SMEs have been receiving solid support, contributing to their business development. Inadequate financing in terms of amounts, maturities, repayment schedules and collateral can not only negatively affect payment capacity of borrowers, but also jeopardize development of small businesses as such. Inadequate financing can lead to over-indebtedness which may ultimately result in business failure.

This article describes a number of erroneous judgments about SME financing, defines an approach for more adequate servicing of SMEs and provides two examples.