Quantexa's SME newly released SME classifier - are you accurately identifying your SME customers?

Jak_Maloret Posts: 4 QUANTEXA TEAM
edited June 11 in Specialist User Groups

Quantexa has introduced a new classifier for Small and Medium-Sized Enterprises (SMEs) based on European Commission guidelines, designed to scale for extensive legal hierarchies. This tool addresses the critical need for accurate SME classification, which plays a significant role in various sectors, including credit risk assessment, customer intelligence, and fraud prevention.

SMEs are the backbone of the global economy, making up 99% of all enterprises in the EU and two-thirds of its private sector jobs. Their classification is crucial for financial institutions to model risk accurately, allocate capital efficiently, and tailor services effectively. Furthermore, SMEs are often prime targets for fraud, making precise classification essential for robust risk monitoring and protection.

However, accurately classifying SMEs presents several challenges. One major obstacle is understanding an enterprise's legal hierarchy, which involves complex calculations of headcount, turnover, and balance sheet totals. The European Commission's definitions add further complexity, requiring precise assessments of ownership percentages and public body influence, where more than 25% ownership by a public body disqualifies an enterprise from being an SME.

Figure 1: Required thresholds for SME classification. If an enterprise’s combined totals satisfy the given threshold requirements, then, in addition to some other checks, the enterprise can be classified as an SME.

Quantexa's advanced technology, including graph traversal and entity resolution algorithms, facilitates the efficient analysis of these complex legal hierarchies. The Q Knowledge Graph algorithm ensures that large datasets can be processed quickly, enabling accurate and scalable SME classification. 

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I would love to hear thoughts on SME classification and your perspectives! As a starter for ten, feel free to use the below questions to share your insights:

  • What are the main challenges your organization faces in classifying SMEs accurately, and how does Quantexa help address these challenges? 
  • What future trends do you see in SME classification, and how might they impact financial crime prevention?