Solving MSME Financing Challenges: Powering Digital Banks

 

Delivered at the Singapore FinTech Festival, this session discussed how digital banks are using data and innovative lending solutions to address the financing challenges faced by Micro, Small, and Medium Enterprises (MSMEs). Panellists shared their experiences from various markets and highlighted strategies to improve financial inclusion and protect consumers. 

Key Highlights 

1. The Digital Banking Revolution in MSME Financing 

  • The rapid increase in financial inclusion in the Philippines, with a jump from 40% to 70% due to digital financial services. 
  • Use of alternative data from payment activity to assess credit risk and create tailored, intuitive solutions for consumers and MSMEs. 


2.  Approaches to MSME Lending 

  • Revenue-based lending through partnerships with payment service providers and e-commerce platforms. 
  • Focuses on creating win-win solutions for merchants, adjusting repayment amounts based on daily revenue and eliminating the need for collateral. 


3. Impact in Mongolia 

  • The importance of digital-first strategies in Mongolia’s vast, sparsely populated landscape. 
  • Collaboration with partners like Coca-Cola to leverage data for personalized SME financing, benefiting underserved and women-led businesses. 


4. Measuring Impact and Financial Inclusion 

  • Panellists stressed the importance of measuring impact beyond mere access to finance. Rachel Freeman shared how Tyme uses AI, cohort analysis, and in-person interviews to evaluate the effectiveness of their financial products. 
  • Manu Panda discussed focus on lowering the cost of finance and tracking customers’ progress through spending patterns, while Temuulen emphasized reaching nomadic populations and improving financial inclusion. 


5. Addressing Risks and Consumer Protection 

  • Data privacy and consumer protection were key concerns. The panel outlined the need for customer consent, digital literacy programs, and robust cybersecurity measures. 
  • Panellists emphasized the need for partnerships, financial education at the point of service, and a strong regulatory framework to combat fraud and over-indebtedness. 
  • The panel also highlighted the importance of collaboration with distribution partners to educate merchants and improve financial literacy. 


Conclusion 
The panel concluded that while digital banking offers immense opportunities for financial inclusion, it must be balanced with strong safeguards and regulatory frameworks. Cooperation among governments, financial institutions, and technology providers is crucial to protect consumers and create a sustainable financial ecosystem. 

 

Watch Full Session

 

Speakers:

  • Manu Panda, Chief Operating Officer, Maya Bank
  • Rachel Freeman, Chief Growth Officer, Tyme
  • Temuulen Batmunkh, Acting Chief Executive Officer, M-Bank

Moderator:

  • Adel Meer, Global Manager for Financial Inclusion, International Finance Corporation

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