Fintech-Driven Credit Scoring Models and Entrepreneurial Financing Access for SMEs in Nigeria
Keywords:
Fintech, Credit Scoring Models, Small and Medium-Sized Enterprises (SMEs), Entrepreneurial Financing, Financial InclusionAbstract
Small and medium-sized firms (SMEs) are important engines of economic growth and employment production in Nigeria, but they are plagued by recurring issues and bottlenecks in getting funding due to the conventional credit scoring methodologies that focus primarily on collateral and formal financial histories. Fintech-driven credit scoring models that rely on alternative data sources such as mobile transactions, utility payments, and digital footprints offer new options to promote financial inclusion and entrepreneurial financing. This study utilises a qualitative, theoretical research approach based on secondary data to examine the prospects, constraints, and policy implications of fintech-driven credit scoring for SMEs in Nigeria. Analysis shows that fintech innovations decrease information asymmetry, improve financial intermediation, and SME adoption depends on technological acceptance. Opportunities include efficiency, transparency, and specialised finance solutions, while obstacles include data protection, regulatory gaps, digital literacy levels, and infrastructure shortages. Policy implications highlight the need for strong regulations, digital infrastructure investments, and collaboration between banks and fintech companies. This study adds to three main debates. First, on fintech and technology, it explores the ways in which alternative data and algorithmic models redefine credit scoring. Second, on SME financing and inclusion, it analyses the ways in which fintech increases entrepreneurial access to capital. Third, on policy and regulation, it underlines the governance structures needed to balance innovation and consumer protection. The findings highlight the revolutionary potential of fintech in Nigeria’s SME sector while advocating for policies that guarantee sustainable and inclusive growth.
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