1、MSME ACCESSTO DIGITALFINANCE STUDYIn Selected EMDECountries In AsiaJanuary 2025Suggested citationCCAF and ADBI(2025),The MSME Access to Digital Finance Study-In Selected EMDE Countries In Asia,Cambridge Centre for Alternative Finance,University of Cambridge and the Asian Development Bank Institute F

2、orewords 4 Research team and Acknowledgements 6 Research partners 7 Executive summary 81.Introduction 10 1.1.Study rationale and research 11 objectives2.Methodology 12 2.1.Data source and collection 13 2.2.Data cleaning and analysis 14 2.3.Limitations 14 2.4.Alternative finance taxonomy 14 Debt-base

3、d models 14 Equity-based models 153.Demographics and 16 business structure 3.1.Profile of respondents(business 17 owners)3.2.Nature and structure of business 204.Relationship with 22 traditional finance 4.1.Use of traditional finance facilities 24 4.2.Previous financing from other 25 sources5.Fintec

4、h financing 28 experience 5.1.Decision-making factors for 29 fintech financing 5.1.1.Primary purpose of borrowing 32 5.2.Borrowing experience 33 5.2.1.Loan application process 33 5.2.2.Amount borrowed 34 5.3.Ability to get funding from 36 another source 5.4.Frequency of use of fintech 38 platforms 5

5、.4.1.Loan Repayment Status 39 5.4.2.Business financing needs met 40 through digital finance6.Outcome of financing 42 6.1.Impact on business indicators 43 6.2.Direct effects of financing 45 6.3.Impact on banking relationship 47 6.4.Concerns about using digital 48 finance providers for business financ

6、ing7.Gender-related data 49 7.1.Demographics 50 7.2.Use of traditional finance facilities 52 7.3.Previous financing from other 53 sources 7.4.Amount borrowed 54 7.5.Outcome of financing 558.Conclusion 589.Country data sample at 60 a glance Bangladesh(n.247)61 Peoples Republic of China(n.107)62 India

7、(n.185)63 Pakistan(n.152)64 Viet Nam(n.52)65 Sources 66Contents4MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.Methodology4MSME Access to Digital Finance Study:In Selected EMDE Countries in AsiaCCAF ForewordThis is the second edition of our Access to Digital Finance in the

8、Asia-Pacific region.Building on our previous publication,the ASEAN Access to Digital Finance Study,the second edition explores the role of digital finance providers in supporting MSMEs,enhancing their access to credit and improving their financial health,in selected emerging markets and developing e

9、conomies(EMDE)countries across Asia.The report focuses on seven countries,namely Bangladesh,the Peoples Republic of China,India,Kazakhstan,Mongolia,Pakistan and Viet Nam.MSMEs play a crucial role in the socio-economic development of EMDEs by fostering entrepreneurship,creating employment opportuniti

10、es,driving innovation,and advancing inclusive growth and sustainable development.However,despite their significance,many MSMEs face persistent challenges,particularly in accessing finance,which hinders them from realising their full potential.Amid the challenges,fintech companies have rapidly evolve

11、d to offer innovative solutions,providing credit and financial services to underserved customers and addressing credit constraints faced by MSMEs,especially in the EMDE countries.This empirical study offers valuable insights into how MSME customers utilise digital finance channels to meet their fina

12、ncial needs,and how digital finance has empowered their financial journey.The research is based on the survey responses from 819 MSME users of digital finance platforms operating across seven surveyed countries.The findings indicate that the majority of digital finance users were sole traders,follow

13、ed by micro and small enterprises,primarily involved in retail and wholesale activities.The financing was primarily to meet short-term financing needs such as paying suppliers,purchasing raw materials and covering unexpected business cash flows.Further,most MSMEs surveyed reported enhanced business

14、performance after obtaining financing through digital finance platforms,highlighting the importance of alternative finance in small businesses financial health.Despite more than half of MSMEs noting no significant concerns about using digital financing,there exists a need to promote adequate disclos

15、ure and digital finance literacy among such users.In addition,MSMEs could only partially meet the financing needs through digital financial providers,indicating a further gap in financing.We hope that the insights from this study can support evolving regulations and policies and further enable the g

16、rowth of the fintech ecosystem while protecting customers interests.We would like to thank ADBI for its generous support and we are very grateful to our fintech research partners who collaborated on this study and ensured robust participation from MSMEs.Bryan Zhang Co-Founder and Executive Director

17、Cambridge Centre for Alternative FinancePavle Avramovic Head of Market and Infrastructure Observatory Cambridge Centre for Alternative FinanceForewords5MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.Methodology5MSME Access to Digital Finance Study:In Selected EMDE Countries

18、 in AsiaADBI ForewordIn recent years,the financial technology(fintech)sector has emerged as a transformative force,reshaping the landscape of financial services across the globe.Nowhere is this transformation more evident than in Asia,where micro,small and medium-size Enterprises(MSMEs)are increasin

19、gly leveraging fintech platforms to drive growth,enhance efficiency and navigate the complexities of the modern financial ecosystem.MSMEs are the backbone of Asian economies,contributing significantly to employment,innovation and economic development.However,they often face substantial barriers to a

20、ccessing traditional financial services,such as high costs,stringent requirements and limited reach.Fintech platforms,with their innovative solutions and user-friendly interfaces,are uniquely positioned to bridge this gap,offering MSMEs access to a range of financial services that were previously ou

21、t of reach.This report,developed with the Cambridge Centre for Alternative Finance,presents the findings of a comprehensive survey on the usage of fintech platforms for fund-raising by MSMEs in seven countries across Asia.Conducted across diverse markets and industries,this study provides valuable i

22、nsights into how these enterprises are making use of fintech platforms to increase the efficiency of and expand their operations.The data collected contributes to our understanding of the benefits,challenges and future potential of fintech adoption among MSMEs in the region.The findings of this surv

23、ey highlight several key findings and trends that need to be addressed.First,respondents reported that financing through digital finance platforms improved their business performance in terms of revenue,net profits and customer base.However,average loan values were small and fully 80%of MSMEs could

24、only raise less than half of needed funds through fintech platforms.Also,female respondents on average reported raising smaller amounts than males did.Finally,MSMEs face challenges such as cybersecurity risks,lack of digital literacy and regulatory uncertainties.It is our hope that the insights gain

25、ed will inform policymakers,financial institutions,and fintech providers,enabling them to better support the growth and development of MSMEs in Asia.By understanding the unique needs and challenges of these enterprises,stakeholders can work together to create a more inclusive and dynamic financial e

26、cosystem.As such,it should become a valuable reference for identifying best practices to promote inclusive growth and development in the region.ADBI is delighted to have supported this project.Peter J.Morgan Senior Consulting Economist and Advisor to the Dean Asian Development Bank Institute6MSME Ac

27、cess to Digital Finance Study:In Selected EMDE Countries in Asia2.Methodology6MSME Access to Digital Finance Study:In Selected EMDE Countries in AsiaResearch team and AcknowledgementsResearch team and authorsAcknowledgementsPhotos:On behalf of the Cambridge Centre for Alternative Finance(CCAF),the r

28、esearch team would like to thank the Asian Development Bank Institute(ADBI)for making this report possible,and for their continued support of the CCAF and its research endeavours.We are grateful to Jill Lagos Shemin,Dana Salman,Stanley Mutinda,Sanya Juneja and Naveen Kumar Gunasegaran from the CCAF

29、for their valuable efforts and support throughout the study.The research team would like to thank the following individuals for their considerable support in survey dissemination and data collection(in no particular order):Muhammad Saeedul Alam(biniyog.io),Zia Hassan Siddique(Dana Fintech),Junaed Ah

30、med(ePolli),Mayesha Binte Mahbub(iFarmer),Irfan Rafique(SuppyLine),Ahsanul Mobin(WeGro),Zhaoli Meng(Micro Connect),Abbey Fang(Micro Connect),Jacky Zuo(Du Xiaoman),Vipul Sharma(Chqbook),Deepak Kothari(ftcash),Nishant Bhaskar(Fundfina),Sanjana Nair(Rang De),Ujjawal Bhaskar(Vayana),Irma Kirvalidze(Swis

31、s Capital),Odmaa Purevdorj(PayOn),Omar Hayat(CashNow),Bassam Siddiqui(Finja),Omer Ahsan(Haball),Nargis Junaid(JazzCash),Yasser Khan(QisstPay),Hira Baig(SeedOut),Emma Tran(DragonLend),Erlin Sitinjak(Funding Societies),Nhi Tran(Validus Viet Nam),Binh Dinh Van(Validus Viet Nam),Milena Naitoh(Validus Vi

32、et Nam).Further,we would like to thank the following individuals for their efforts in identifying the key fintech research partners and supporting outreach efforts:Sugandh Saxena(Fintech Association for Consumer Empowerment(FACE),Taimoor Ali(Karandaaz)and Bina Wali(Pakistan Fintech Association).We a

33、ppreciate these individuals significant contribution and willingness to participate as research partners to make this study possible.We would like to extend our gratitude to Sally Daultrey for proofreading the report,Mike Green for designing the report and Adriana Senior for press and communications

34、 support.In addition,we would like to thank Kaori Hitomi and Dean S.Irvine from the Asian Development Bank Institute for their immense help in disseminating this study.Cambridge Centre for Alternative Finance(CCAF)Krishnamurthy Suresh(Principal Researcher),Felipe Ferri de Camargo Paes(Principal Rese

35、archer),Loh Xiang Ru,Richard Kithuka,Pavle Avramovic and Bryan Zhang.Asian Development Bank Institute(ADBI)Peter Morgan,Senior Consulting Economist and Advisor to the Dean.7MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.Methodology7MSME Access to Digital Finance Study:In Se

36、lected EMDE Countries in AsiaResearch partners Fintech partners Association and Industry partners 8MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.Methodology8MSME Access to Digital Finance Study:In Selected EMDE Countries in AsiaExecutive summaryBuilding on the first editio

37、n of the Access to Digital Finance study in the ASEAN region,this study explores the role of digital finance providers in supporting MSMEs,enhancing their access to credit and improving their financial health,in selected EMDE countries across Asia.The report focuses on seven countries:Bangladesh,the

38、 Peoples Republic of China,India,Kazakhstan,Mongolia,Pakistan,and Viet Nam.This study has been jointly developed by the Cambridge Centre for Alternative Finance(CCAF)at Cambridge Millennials,aged 25-44,comprised the largest proportion of respondents(business owners),a trend observed consistently acr

39、oss all surveyed countries.Of those surveyed,77%are male and 22%female.Regarding their level of education,37%hold an undergraduate degree,29%completed secondary school education,and 6%did not attend school.Female business owners had a lower education level,with a much higher proportion of respondent

40、s who did not attend school compared to males.Most of the MSMEs who responded are sole traders,primarily engaged in retail and wholesale activities,with business operations organised around conventional structures(i.e.using physical premises).About 60%of the surveyed MSMEs are operating as sole trad

41、ers,followed by micro(fewer than 10 employees)and small(10-49 employees)enterprises,representing 92%of the study sample.The majority of respondents business activities are in retail or wholesale trade or agriculture,with nearly 60%indicating them as their primary activities.Most MSMEs operated prima

42、rily with conventional structures,i.e.retail stores(47%)and commercial premises(15%),The key findings are summarised below:Judge Business School,University of Cambridge and the Asian Development Bank Institute(ADBI).This empirical study is based on the cleaned and verified data responses from 819 MS

43、MEs operating across all seven surveyed countries.In particular,the study looks at the following key aspects of digital finance use:respondent/business owner profile/demographics and company structure,relationship with traditional finance channels,financing experience when using fintech-based financ

44、ial services and post-financing outcomes.17%reported that they operate their business from their residence.This strongly influenced the financing value,with those in traditional structures receiving five to six times as much as those operating from residences.Banks were the primary funding source fo

45、r MSMEs before using fintechs,but only 57%reported successful financing.When asked if MSMEs had approached other funding sources before turning to digital finance providers,banks were the most common source of funding.The second and third most popular sources were family and friends(53%success rate)

46、and microfinance institutions(66%success rate).While banks were the primary funding source for medium and micro enterprises,microfinance institutions catered to sole traders.At a country level,overall,it was observed that MSMEs in countries with a higher financial development index(e.g.:PRC,India an

47、d Viet Nam)relied more on the banks as the main successful source of funding,while MSMEs in countries with a lower financial development index(e.g.:Bangladesh,Kazakhstan,Pakistan and Mongolia)relied more on microfinance institutions and non-bank financial institutions.9MSME Access to Digital Finance

48、 Study:In Selected EMDE Countries in Asia2.Methodology9MSME Access to Digital Finance Study:In Selected EMDE Countries in AsiaMSMEs considered better approval rates,better customer service,speed in disbursement,less complex applications and flexible terms as the important factors when financing thro

49、ugh digital finance platforms.Medium(92%)and small(93%)enterprises valued swift fund disbursement,whereas simplified application procedures and flexible payment terms were important to over 90%of micro businesses and sole traders.Notably,nearly half(48%)of the MSMEs reported using fintech platforms

50、multiple times to finance their businesses.Overall,loan values among MSMEs were low and,on average,businesses owned by females had smaller loan tickets than males,a trend that was seen across all business sizes.The median amount borrowed across the surveyed countries was USD 1,412,while the average

51、ticket was slightly higher than USD 5,400,when excluding outliers.Approximately 66%of businesses borrowed less than USD 5,000,with 45%borrowing less than USD 1,000.Primary reasons for financing were meeting business growth needs(43%)and working capital(36%).For women,in particular,obtaining finance

52、was primarily used to initiate their business activity(27%)and purchase raw materials(25%).This shows that digital finance may therefore be among the important factors that support women in small businesses through their initial entrepreneurship phase,especially in EMDEs.In general,most MSMEs(80%)no

53、ted that less than half of their financing needs were met through digital financing platforms.Despite the inclusiveness of digital finance solutions,MSMEs still suffer from a large financing gap in Asia,suggesting a potential market opportunity for financial service providers.In contrast,the remaini

54、ng 20%of MSMEs reported that more than half of their financing needs were met through online finance.Notably,44%of respondents also reported their uncertainty or inability to get financing from any source other than a fintech provider,citing high interest rates,lack of collateral,credit history and/

55、or business documents,and complex application procedures as key reasons.In general,digital lending platforms consider a broader range of data points than traditional credit scoring and prioritise cash-flow over asset-backed lending.They play a crucial role in enhancing the growth and resilience of M

56、SMEs,particularly micro and small businesses,especially in the areas where traditional banking is less accessible.Most MSMEs(around 80%)reported growth in their business performance(revenue,net profit and customer base)as a result of financing through digital finance platforms.Most businesses report

57、ed that digital financing had a positive impact on their business,primarily through expansion,asset purchases,and increased inventory/raw materials.This emphasises the importance of access to finance for healthy business operations.Notably,the overall default rate of surveyed MSMEs,which was less th

58、an 1%,was much lower than the non-performing loans ratio of all surveyed countries(between 1.6%and 9.0%).In general,the use of traditional finance products and services by MSMEs increased as a result of financing through fintech platforms.Most businesses(60%)reported that they had started using,or i

59、ncreased their use of savings and checking accounts,a trend largely observed among micro and sole businesses.Additionally,MSMEs also noted an increase in the use of credit products(overdrafts,loan contracts)and payment products(cheques,debit/credit cards,PoS systems),particularly among small busines

60、ses and those operating in Bangladesh,India and Viet Nam.The results support the hypothesis that alternative finance platforms in developing economies complement traditional banking systems,by focusing their services on the underbanked and enabling financial inclusion.There is a need to promote adeq

61、uate disclosure and digital financial literacy among digital finance users.More than half of the surveyed MSMEs(56%)that used digital finance platforms to finance their business reported no significant concerns about using them,but a few challenges exist.The top concerns reported were difficulty in

62、operating devices(26%),such as reported by users in Bangladesh;lack of understanding about fintech products and services(19%),for example,users in Viet Nam and India;and lack of transparency in borrowing costs(12%),for example,users in India,Mongolia and PRC.10MSME Access to Digital Finance Study:In

63、 Selected EMDE Countries in Asia1.Introduction1.INTRODUCTION11MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia1.IntroductionMSMEs are widely recognized as engines for growth and inclusion,particularly in EMDEs.They play a crucial role in fostering economic development by creat

64、ing jobs,stimulating innovation,and driving competition.In most EMDEs,MSMEs constitute a significant portion of the economy,providing employment opportunities for a large segment of the population,including women and youth.This not only helps reduce poverty but also promotes social inclusion.However

65、,in East Asia-Pacific and South Asia,about 45%and 38%of MSMEs,respectively,faced credit constraints,according to the International Finance Corporation(IFC)in the MSME finance forum.i For several reasons,MSMEs are less likely than larger firms to obtain credit from traditional finance sources,such as

66、 high-street banks.They typically lack collateral and adequate financial performance data,have shorter or no credit histories,and face higher interest rates compared to larger enterprises.These challenges arise because MSMEs are perceived as higher risk due to their smaller size and limited financia

67、l transparency.Consequently,this barrier in access to finance hinders economic growth.These challenges are particularly acute in EMDEs.According to the International Finance Corporation(2017),ii it is estimated that about 40%of formal MSMEs cannot meet their financial needs in EMDEs,with the financi

68、ng shortfall amounting to over USD 5 trillion per year.Factors contributing to this include underdeveloped financial systems,a lack of credit information infrastructure,and regulatory environments that may not support MSME lending.Furthermore,the IMF(2023)iii reports that the macroeconomic effects o

69、f COVID-19 have exacerbated these challenges,leading to a reduction in commercial banks outstanding loans to MSMEs as a share of GDP in many economies by 2022.This is the second edition of our Access to Digital Finance study in the Asia-Pacific(APAC)region.The ASEAN Access to Digital Finance Study w

70、as the first edition which provided valuable data and insights into how individual households and micro,medium and small enterprise(MSME)customers utilised digital alternative finance channels to access credit or raise funds across key jurisdictions in the Association of Southeast Asian Nations(ASEA

71、N)region,i.e.Indonesia,Malaysia,the Philippines,Singapore and Thailand.This edition of the Access to Digital Finance Study focuses on MSMEs operating in selected emerging markets and developing economies(EMDEs)in Asia,namely Bangladesh,Peoples Republic of China(hereafter PRC),India,Kazakhstan,Mongol

72、ia,Pakistan and Viet Nam*.1.1.Study rationale and research objectives*Use of country names Viet Nam and Peoples Republic of China as per ADB nomenclature(https:/www.adb.org/where-we-work)Amid these challenges,financial technologies and business models have rapidly evolved.Fintech companies have beco

73、me crucial providers of innovative solutions tailored to offer credit and other financial services to underserved customers.With improved credit scoring techniques and channel partnerships,iv fintech companies are effectively addressing some of the credit constraints faced by MSMEs,especially those

74、operating in EMDE countries.A global study on fintech companiesv shows that nearly 56%reported providing specialised fintech products and services to MSMEs in EMDEs,compared to 39%in Advanced Economies(AEs).Specifically,digital lending and capital-raising fintech companies are focusing on closing th

75、e financing gap for MSMEs and are becoming a popular choice.To this end,the Cambridge Centre for Alternative Finance(CCAF)at Cambridge Judge Business School,University of Cambridge and the Asian Development Bank Institute(ADBI)jointly conducted this study to assess how MSMEs use online digital finan

76、ce(alternative finance or fintech)platforms to access credit or raise funds in the selected EMDE countries across Asia.The study explores how digital finance products and services are being used,how they complement consumers existing banking activities,and how they can evolve to serve consumers chan

77、ging needs.It focuses on key opportunities and challenges faced by MSMEs,their financing needs,and concerns regarding the use of digital finance services.Finally,the report aims to provide valuable data and insights to aid regulators,policymakers,and stakeholders in supporting MSME development and e

78、conomic growth.12MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia1.Introduction2.METHODOLOGY13MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.MethodologyThe primary dataset for this report was sourced from the Asia MSME Access to Digital Finance Survey

79、,developed by the CCAF and ADBI.This online survey targeted sole traders and micro,small,and medium-sized businesses1 that had utilised digital lending or digital capital raising fintech platforms throughout 2023.The data was collected between 19th February to 15th April 2024.Respondents were invite

80、d to answer up to 26 questions if they were digital lending users,and up to 24 questions if they were digital capital raising users.To ensure broad reach and accessibility in global fintech markets,the survey was translated from English into 11 languages:Bengali,Hindi,Kazakh,Khmer,Mandarin,Mongolian

81、,Russian,Sinhala,Tamil,Urdu and Vietnamese.After defining the scope of the report,a syndicate of research partners were built.Initially,this invitation-only initiative targeted a carefully selected group of digital lending and digital capital raising fintechs offering digital finance services to sol

82、e traders,micro,small and medium enterprises across 19 EMDEs in APAC.The final consortium of partners included 26 fintech partner firms2 across nine countries:Bangladesh,Cambodia,the PRC,India,Kazakhstan,Mongolia,Pakistan,Sri Lanka and Viet Nam.The selection of countries was based on the acceptance

83、of fintech research partners operating in these nine countries to participate in and 1.For the purposes of this study,sole traders and micro,small and medium enterprises are together termed as MSMEs in the report.2.Research partners comprised six companies in Bangladesh(Biniyog.io,Dana Fintech,ePoll

84、i,iFarmer,SupplyLine,WeGro)two in PRC(Micro Connect,Du Xiaoman Technology),five in India(Chqbook,ftcash,Fundfina,Rang De,Vayana),one in Kazakhstan 2.1.Data source and collectioncontribute to the Study.Due to insufficient responses from Sri Lanka and Cambodia,the report focuses on the remaining seven

85、 countries for data analysis.This enables robust single-country analysis and cross-country comparisons,providing quality insights through empirical data.The partner firms were invited to collaborate with and assist the research team to refine and test the survey and provide substantial support in th

86、e data-collection process.The online survey was distributed in collaboration with these syndicate partners.Participants were encouraged to respond to the online survey via a unique survey link(provided to the research partners by CCAF)for the fintech platform they were using.Although surveys were di

87、stributed through the syndicate partners,only the CCAF research team could access the raw data for data verification purposes,ensuring participants anonymity throughout the process.The survey was distributed in a phased,multipronged outreach campaign.This included social media and other press activi

88、ties to raise awareness of the study and direct outreach from the fintech research partners.In addition to the fintech platform partners,the study also benefitted from the assistance of three leading fintech industry associations3 across Asia who served as research collaboration partners.(Swiss Capi

89、tal),one in Mongolia(PayOn),six in Pakistan(CashNow,Finja,Haball,JazzCash,QisstPay,Seed Out)and three in Viet Nam(DragonLend,Funding Societies,Validus).(One partner each from Cambodia and Sri Lanka).3.FinTech Association for Consumer Empowerment(FACE)(India);Pakistan Fintech Association and Karandaa

90、z Pakistan(Pakistan).14MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.MethodologyLimitations to this study include sample size and response distribution.Since the online survey was distributed through the fintech research partners,the research team had no control over the n

91、umber of responses,which were not evenly distributed among the countries considered in this study,or the representativeness of the sample.Hence,we could not perform any cross-business-model,cross-country or randomised analysis.In this study,we did not attempt to measure the quality,price and diversi

92、ty of loan offers,neither was it our aim to measure the behaviour of MSMEs(such as 2.3.Limitationsherd behaviour and anchoring)in deciding between online financial products or services and traditional banking products or services.Thus,further research is needed to analyse these aspects of financial

93、products and services.It was not our intention to present precise or absolute figures for borrowed or fundraised amounts,or their overall performance,but rather to provide an assessment of how MSME borrowers and fundraisers experience and use fintech solutions for their financing needs in the countr

94、ies surveyed.This report focuses on online alternative finance models under the umbrella of the fintech industry verticals of digital lending and digital capital raising,according to the CCAF Alternative Finance Taxonomy,grouping them into debt and equity-based models.The alternative finance ecosyst

95、em comprises various lending,investment and non-investment models that enable individuals,businesses and other entities to raise funds via a digital marketplace.As the ecosystem has evolved,distinct model types have emerged.In this regard,the CCAF has developed a taxonomy of 16 business models,group

96、ed into three categories:debt,equity and non-investment.For this study,we discuss only relevant debt-and equity-based model categories.2.4.Alternative finance taxonomyDebt-based models Debt-based models,commonly associated with person-to-person(P2P)and marketplace lending activities,include online n

97、on-deposit-taking platforms from which individual lenders or institutional investors can extend credit to individuals,businesses,or other borrower entities.This debt can be in the form of a secured or unsecured loan,a bond or another type of debtor note.Table 1 summarises the debt-based models inclu

98、ded in this study.During the data collection phase,a comprehensive multi-stage verification process was implemented to scrutinize survey responses for anomalies and inconsistencies.The research team performed data cleansing and verification to ensure robust representation of fintech users and region

99、s.Once the data was thoroughly cleaned and cross-verified,each firm was assigned a unique ID.In compliance with the EU General Data Protection Regulation(GDPR)and the University of Cambridge data protection rules,personal and firm-level identifiers were removed,and the raw data was transferred to a

100、separate,secure database.2.2.Data cleaning and analysisAll analyses were conducted on the anonymised dataset,and results were reported at aggregate level,categorized by vertical or geographical jurisdiction.Only data from the anonymised and sanitised database were analysed,and entries that could not

101、 be verified or referenced activities outside the tested taxonomy were excluded from the study.Approximately 11%of the total responses received were discarded,producing a final dataset of 819 responses from the MSME clients of the syndicate research partners.Of the total dataset,766 respondents were

102、 users of digital lending fintechs,and the remaining 53 were digital capital raising users.15MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia2.MethodologySource:CCAF TaxonomyTable 1:Models included in the debt-based category*P2P lending:A group of individual or institutional i

103、nvestors that provide a loan(secured or unsecured)to a consumer or business borrower.In its most orthodox form,the P2P lending platform acts as a marketplace connecting the borrower and investor(s)so that the financial risk of the loan not being repaid lies with the investor and not the platform.Thi

104、s model is variously known across jurisdictions as loan-based crowdfunding,marketplace lending,collaborative financing or crowdlending.*Balance sheet lending:A digital lending platform that directly retains consumer or business loans(either whole or partial)using funds from the platform operators ba

105、lance sheet.These platforms,therefore,function as more than just intermediaries,originating and actively funding loans so the financial risk of the loan not being repaid lies with the platform operator.In this respect,the platform operator acts more like a non-bank credit intermediary.*Increasingly,

106、invoice trading models are expanding into supply-chain finance activities.At present,this subset activity is too small to categorise as a separate model.This model may subsequently need further refinement.Fintech industry verticalBusiness modelStakeholderDigital lendingP2P/marketplace business lendi

107、ng*Individuals and/or institutional funders provide a loan to a business borrowerBalance sheet business lending*The platform entity provides an unsecured or secured loan directly to the business borrowerInvoice trading*Individuals and/or institutional funders purchase invoices or receivables from a

108、business at a discountCrowd-led microfinanceInterests and/or other profits are re-invested(forgoing the interest by donating)or provides microcredit at lower ratesMerchant cash-advanceA merchant cash advance provided via an electronic platform,typically with a retail and/or institutional investor co

109、unterpart receiving fixed payments or future payments based on sales.Source:CCAF TaxonomyTable 2:Models included in the equity-based categoryFintech industry verticalBusiness modelStakeholderDigital capital raisingEquity-based crowdfundingIndividuals and/or institutional funders purchase equity issu

110、ed by a companyRevenue/profit share crowdfundingIndividuals and/or institutions purchase securities from a company,such as shares,and share in the profits or royalties of the businessEquity-based models Equity-based models(including equity-based crowdfunding)involve activities where individuals or i

111、nstitutions invest in unlisted shares or securities issued by a business,typically a start-up.As equity-based models have advanced,sub-sets of the model,such as real estate and property-based crowdfunding,have flourished,allowing investors to fully or partially own a property asset by purchasing pro

112、perty shares.Table 2 summarises the equity-based models included in this study.16MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia1.Introduction3.DEMOGRAPHICS AND BUSINESS STRUCTURE 17MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia3.Demographics and busi

113、ness structure3.1.Profile of respondents(business owners)Source:Survey dataFigure 1:Distribution of respondents by country(n.819)The data sample comprised responses from seven EMDE countries across Asia,which includes some of the emerging markets in the region.vi Most respondents were from Banglades

114、h(30%),India(23%),Pakistan(19%)and the PRC(13%),with smaller numbers of survey participants from Viet Nam(6%),Kazakhstan(5%),and Mongolia(4%)(Figure 1).4Regardless of their economic development status,these countries have improved in certain financial indicators over the past few years with a rise i

115、n the number of account holders(both financial institution accounts and mobile money accounts),smartphone ownership,internet access,and mobile money accounts.vii In this trend,the improved infrastructure can lead to a proliferation of digital finance products and services,previously untapped channel

116、s,creation of new financial instruments,and can offer catalytic and innovative ways to support MSMEs access to finance by developing alternative sources of capital to fill the existing MSME finance gap.4.The number of responses is based on survey submissions from the MSMS clients of the partnering f

117、intech firms.While the survey targeted multiple countries,the representation from each country is not evenly distributed,which may have generated country biases in the results.Additionally,entries that could not be verified or referenced against activities outside of the analysed alternative finance

118、 taxonomy were excluded from the study.30%23%19%13%6%5%4%BangladeshIndiaPakistanPeoples Republic of ChinaViet NamKazakhstanMongolia18MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia3.Demographics and business structureSource:Survey dataSource:Survey dataFigure 2:Distribution o

119、f respondents by gender(n.819)Figure 3:Distribution of respondents by age(n.819)Most respondents were male(77%),with relatively fewer female respondents(22%)(Figure 2).This trend was seen across all business sizes,with the percentage of male respondents ranging from 75%to over 82%.Bangladesh and Ind

120、ia reported the highest numbers of male respondents,at 96%and 88%,respectively.Other studies have reported similar figures for India,where 93%of the customer base was composed of males.viii In contrast,nearly 45%of the surveyed MSME owners in Pakistan were females.Mongolia was the only country with

121、a majority of female respondents(69%).77%22%1%0%10%20%30%40%50%60%70%MaleFemalePrefer not to say80%1%6%33%38%17%4%1%1%5%10%15%20%25%30%35%40%Below 1818-2425-3435-4445-5455-64Above 6519MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia3.Demographics and business structureSource:S

122、urvey dataFigure 4:Distribution of respondents by level of education5(n.819)Over half the respondents were Millennialsix(aged 25-44,also known as Generation Y,a generational cohort typically defined as individuals born between 1981 and 1996),with 33%between 25 and 34 years of age and 38%between 35 a

123、nd 44,a trend observed consistently across all surveyed countries(Figure 3).The Global Entrepreneurship Monitor(GEM)2023/24 report The distribution of MSME business owners by educational attainment reveals that 37%hold an undergraduate degree,29%completed secondary school education and 6%did not att

124、end school.The notes that younger individuals,particularly those in the Millennial age group,are significantly more active in starting new businesses compared to older individuals.x Known for their use of technology,Millennials may be particularly receptive to digital finance services and their fami

125、liarity with technology suggests a greater likelihood of embracing and utilising fintech solutions.xi largest share of owners who did not attend school were from Pakistan(68%),followed by Bangladesh(23%).The vast majority of those businesses were sole traders(94%)(Figure 4).5.For Kazakhstan,Primary

126、or Elementary level school is equivalent to Pre-school/Primary General Education in other jurisdictions;Secondary level school/high school is equivalent to Basic General Education/Secondary General Education;Technical education or vocational training to Secondary Vocational Education;and Undergradua

127、te degree(bachelors)is equivalent to Undergraduate degree/Higher education(bachelors).37%29%10%10%8%6%0%5%10%15%20%25%30%35%40%Undergraduatedegree(Bachelors)Secondary levelschool/highschoolPrimary orelementarylevel schoolPostgraduatecertifcate(Mastersdegree,or above(PhD)Technicaleducation orvocation

128、altrainingDid notattend school20MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia3.Demographics and business structure3.2.Nature and structure of businessSource:Survey dataSource:Survey dataFigure 5a:Distribution of respondents by business size(n.819)Figure 5b:Distribution of r

129、espondents by business size,by country(n.815)60%18%14%8%0%10%20%30%40%50%60%70%Sole proprietor/Sole trader(one person)Micro(fewer than10 employees)Small(10 to 49employees)Medium(50 to 249employees)75%26%59%63%72%75%13%11%25%21%13%25%11%37%10%21%13%20%3%8%40%4%28%7%4%6%10%0%10%20%30%40%50%60%70%80%90

130、%100%Bangladesh(n.247)Peoples Republic ofChina(n.107)India(n.185)Kazakhstan(n.40)Mongolia(n.32)Pakistan(n.152)Viet Nam(n.52)Sole proprietor/Sole trader(one person)Micro(fewer than 10 employees)Small(10 to 49 employees)Medium(50 to 249 employees)21MSME Access to Digital Finance Study:In Selected EMDE

131、 Countries in Asia3.Demographics and business structureSource:Survey dataFigure 6:Distribution of respondents by business sectors Top 10(n.819)Overall,the majority of respondents were operating as sole traders(60%),a distribution consistent across genders,with sole traders comprising 59%of male resp

132、ondents and 63%of female respondents in this survey(Figure 5a).In most of the surveyed countries,a significant proportion of respondents identified as sole traders,ranging from 59%to 75%(Figure 5b).Notable In general,traditional MSMEs across Asia primarily include wholesale and retail trade,agribusi

133、nesses,food processing,and other service-related businesses(Figure 6).xii In this survey,most participating businesses operated in the trade sector i.e.retail or wholesale(35%),with this proportion remaining consistent across gender,country,and business size.Trade sectors often employ a substantial

134、workforce and are important economic drivers worldwide,as highlighted by the World Economic Forum.xiii Agriculture and allied activities accounted for the second-largest number exceptions include the PRC and Viet Nam,where only 26%and 13%of respondents,respectively,identified as such.The company siz

135、e distribution of respondents from the PRC was relatively balanced.However,in Viet Nam,small enterprises(with 10 to 49 employees)accounted for the largest proportion,about 40%.of respondents(24%)(and of those,68%were from Bangladesh).Only 4%of respondents in the agriculture sector were females.This

136、aligns with findings that women in agriculture face numerous barriers,including limited access to resources and financing.xiv The only sector where females had a larger representation compared to males was Professional&Household Services(57%vs.43%).This is indicative of global trends where women are

137、 more likely to be employed in service-oriented roles.xv*includes agribusinesses(such as agri input-retailers,traders),farming,animal husbandry etc.*includes freelancers and gig workers(e.g.delivery/rideshare drivers).*includes mechanics,electricians,hairdressers,cleaning services etc.35%24%7%6%5%5%

138、4%3%3%2%050100150200250300Trade(retail and wholesale)Agriculture andallied activities*Manufacturingand engineeringOther services*FinancialservicesProfessional&household services*HospitalityConstruction&building materialsTechnologyHealthcareNumber of Respondents22MSME Access to Digital Finance Study:

139、In Selected EMDE Countries in Asia3.Demographics and business structureSource:Survey dataFigure 7:Distribution of respondents by mode of operation(n.819)Notably,gig workers,classified under other services,6 account for 6%of the businesses that responded.CGAP(2023)xvi highlighted the growing importan

140、ce of platform workers in sectors such as delivery and ride-hailing services.These workers,although tech-savvy,often find that traditional financial services are not designed to meet their specific needs.Traditional credit products typically assume regular income and Almost half of the respondents o

141、perated their business via a retail store(47%),followed by those who operated from their residences(17%)and those in commercial premises i.e.an office,factory or industrial building(15%)(Figure 7).Business modes of operation were generally equally distributed across genders,with notable exceptions:3

142、7%of female respondents operated from their residences compared to 12%of male respondents.Furthermore,10%of male respondents were retail agents compared to only 3%of female respondents.Home-based businesses were predominantly sole traders and female-owned,reflecting global trends that indicate women

143、 balancing comprehensive financial records,which gig workers often lack due to the irregular and varied nature of their work.These workers may face financial instability due to variable income streams,making it difficult for them to manage basic living expenses and qualify for loans.xvii This gap hi

144、ghlights a significant opportunity to develop tailored financial products that address these unique challenges.their family responsibilities with entrepreneurship.xviii In general,such informal businesses,which tend to be self-operated and based out of residences,make up the larger proportion of und

145、er-served micro enterprises.xix Micro,small and medium enterprises operated from formal premises,either commercial or separate.Online-only or e-commerce ventures were particularly prevalent among young entrepreneurs aged 18-24.Respondents from the 55 to 64 age group,as well as those from Pakistan,pr

146、edominantly operated from their residences(45%).6.Gig workers in Bangladesh,the PRC,India,Kazakhstan,Pakistan,and Viet Nam frequently operate within the informal sector,facing significant challenges related to their job security,social protections and fair treatment.47%17%15%9%5%5%2%0%5%10%15%20%25%

147、30%35%40%45%50%Merchant withstore(separatepremises)Operatedfrom residenceOfce/Factory/IndustrialbuildingRetailagentMerchantwithout storeOnline-only ore-commerceOthers23MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia4.Relationship with traditional finance4.RELATIONSHIP WITH TR

148、ADITIONAL FINANCE 24MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia4.Relationship with traditional finance4.1.Use of traditional finance facilitiesSource:Survey dataFigure 8:Forms of traditional finance products used in the past 12 months(2023)(n.819)*N/A:respondent had not u

149、sed any traditional finance products/services in the past 12 months(or throughout 2023).*Other financial products or instruments that may cater to businesses.Respondents were asked about the various forms of traditional finance products and services they used for their business during the past 12 mo

150、nths(or throughout 2023).Respondents reported greater utilisation of traditional financing options such as business loans and personal current accounts,compared to flexible credit solutions and credit cards.A significant 40%of respondents indicated business loans as the main product used with tradit

151、ional finance providers(Figure 8).Personal current accounts followed closely,used by 39%of MSMEs.Personal loans were also notable,with 34%of MSMEs using them.Business credit cards and overdraft accounts were the least utilised,with only 7%and 8%of MSMEs indicating their use,respectively.39%34%22%20%

152、40%12%7%9%8%3%11%0%5%10%15%20%25%30%35%40%45%Personal current account(n.321)Personal loan(n.275)Personal checking or savings account(n.178)Personal debit/credit card(n.163)Business loan(n.324)Business savings/checking account(n.98)Business credit card(n.60)Mortgage,bridge loan or another secured loa

153、n from a bank/specialist provider(n.73)Overdraft accounts(n.62)Other*(n.24)PersonalfnancialproductsBusinessfnancialproductsOtherfnancialproductsN/A*(n.88)25MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia4.Relationship with traditional finance4.2.Previous financing from other

154、sourcesSource:Survey dataFigure 9:Previous financing applications from other sources(n.819)Notably,11%of respondents indicated that they did not use any traditional finance products during the past 12 months(or throughout 2023).;of those,91%are male;and 72%were aged between 25 and 44.Of the 11%,64%h

155、ad secondary level education or below,higher than the overall rate of 45%(see Figure 4).Most individuals who did not use traditional finance products were from Bangladesh(57%),with India and Pakistan together accounting for 35%.Generally,businesses had approached various other funding sources before

156、 turning to a digital finance provider.We focus on the funding sources Following the overall trend,analysis by the size of MSMEs showed that business loans were favoured across all categories with 18-20%indicating their use.In addition,around 20%of sole traders and micro businesses also showed a str

157、ong preference for personal current accounts,suggesting that these businesses often use personal financial products to meet their business needs.approached prior to using a digital finance service and explore the success rates of MSMEs in obtaining financing from these sources.73%57%67%53%57%66%51%4

158、7%40%42%40%39%39%26%36%28%35%26%0100200300400500600700BankFamily and friendsMicrofnance institutionNon-bank fnancialinstitutionInformal fnanceproviderCredit cooperativeGovernment/public funderPrivate equity from angelsPrivate equity fromventure capitalRespondents that sought fundingOf those that rec

159、eived fundingNumber of Respondents26MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia4.Relationship with traditional financeBanks were the most common source of funding for MSMEs,with 73%of respondents reporting seeking funds before using fintech providers(Figure 9).However,onl

160、y 57%of those MSMEs indicated that they were able to successfully secure funding from the banks.The second and third most popular sources of funding were family and friends and microfinance institutions.Across all the sources,microfinance institutions had the highest successful rates,with 66%of MSME

161、s indicating that they successfully received funding from them.Family and friends were also common,with 53%of MSMEs successfully receiving funding.In contrast,the funding sources with the highest shares of unsuccessful applications were banks(32%),family and friends(31%)and government and public sou

162、rces(29%).MSMEs of all size categories most frequently sought funding from banks,with over 70%in each category.Larger firms were more likely to successfully obtain bank loans:86%of successful applicants were medium size firms,73%small and micro,and 42%sole traders.Similarly,over 60%of small,micro,an

163、d sole traders sought funding from family and friends,with size-related success rates of 80%,70%,and 38%respectively,indicating this as the most successful source for small enterprises.Notably,over 60%of sole traders also sought funding from microfinance institutions,achieving a 64%success rate,maki

164、ng it the most successful source for these businesses.Business owners who had attained lower levels of education used simpler and less complex sources of funding compared with owners with higher levels of education.Business owners without formal education and those with primary and secondary educati

165、on were more successful in raising funds from microfinance institutions,at 83%,64%,and 64%,respectively.Business owners with higher education,such as technical education and vocational skills(80%),undergraduate(66%)and postgraduate(69%),were more successful in getting bank loans.Overall,business own

166、ers in countries with a higher financial development index(above 0.36,according to the World Bank Groupxx)relied more on the banking system as the main successful source of funding,with the PRC,India,and Viet Nam recording funding success rates of 90%,64%,and 88%,respectively.Business owners in coun

167、tries with a lower financial development index(below 0.36)relied more on microfinance institutions(and non-bank financial institutions)with Bangladesh,Kazakhstan,Pakistan,and Mongolia indicating funding success rates of 47%,87%,81%(80%),and 71%(83%)respectively.27MSME Access to Digital Finance Study

168、:In Selected EMDE Countries in Asia4.Relationship with traditional financePARTNER CASE STUDYFintech Platform Vayana MSME Naira Distributors Country IndiaBrief history of the companyNaira Distributors,run and managed by an ambitious first-generation entrepreneur,is a distributor of a renowned regiona

169、l mass-market footwear brand in southern India.Located in one of the remotest towns in the state of Karnataka,Naira has collaborated with a supply-chain partner since 2016,catering to a network of around 100 micro entrepreneur retailers.What obstacles had the company faced in obtaining finance from

170、other sources,such as banks and other financial institutions?While operating on a cash-and-carry basis with the supplier,Naira faced significant challenges due to demand from retailers for credit.Micro-businesses like Naira are often overlooked by larger financial entities due to their regional focu

171、s,limited scale and poor accessibility.The absence of structured supply chain financing(SCF)in the industry aggravates their challenges,as conventional lenders are hesitant to engage with industries lacking existing frameworks.Additionally,the industrys low margins and extensive distribution network

172、s impose further barriers,making it nearly impossible for Naira Distributors to access credit at an affordable cost and reasonable terms.Why did this company decide to seek financing through the fintech platform?Vayana,Indias largest SCF Infrastructure,was pivotal in facilitating the much-needed fin

173、ancing support for Naira.Vayana introduced Naira to its Distributor Financing Program in partnership with a prominent Non-Banking Financial Company(NBFC)catering to businesses in Southern India.It banked on Nairas long-term partnership with the supplier and strong consumer pull of the brand in south

174、ern India and developed a program with the NBFC enabling Naira to avail a much-needed,unsecured financing facility on favourable terms and at an affordable rate.How has the received financing impacted the MSME business and operations?The strategic partnership with Vayana empowered Naira to overcome

175、the financing challenges that were hindering its growth.Through Vayanas advanced credit appraisal framework and fully digital transaction platform,Naira received an unsecured credit limit of USD$30,000 in 2021.This infusion of capital helped Naira save 600 basis points on the interest payment and fu

176、eled its rapid growth.Furthermore,Naira benefits from a direct discount extended by the brand after their program enrolment.Capitalizing on their strengthened financial position,Naira Distributors experienced a remarkable 40%increase in annual turnover,soaring from USD$350,000 to$500,000 with increa

177、sed market reach and better operational efficiency to operate on a more sustainable and profitable footing for continued success in their niche market segment.28MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia4.Relationship with traditional finance5.FINTECH FINANCING EXPERIENC

178、E29MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experience5.1.Decision-making factors for fintech financing Source:Survey dataFigure 10:Decision-making factors for financing from fintech providersFollowing the COVID-19 pandemic,it has become more difficu

179、lt for MSMEs to get financing,reflecting the end of years of low interest rates in many economies.MSMEs saw a sharp rise in the cost of finance,with median interest rates rising by 1.1 percentage points in 2022 compared to 2021,according to the OECD(2024)xxi-the highest rise ever registered globally

180、.In this section,we explore the various aspects of MSME financing with fintech providers,seeking insights into their decision-making about using digital finance providers,the purpose of financing,amount borrowed,repayment status,frequency of use and proportion of financing needs met.72%72%70%70%70%7

181、0%67%63%63%60%54%50%19%20%20%19%21%22%23%23%22%23%26%28%5%5%5%5%5%5%6%8%8%9%9%13%4%3%5%6%4%3%4%6%7%8%11%9%0%10%20%30%40%50%60%70%80%90%100%Better approval rate(n.766)Better customer service(n.816)Less complex application process(n.816)Flexible terms(n.766)Speed of receiving funds(n.816)Enhanced tran

182、sparency(n.816)Easy verifcation of business information(n.816)Better interest rates than traditional fnancial providers(n.766)Lower transaction costs than traditional fnance providers(n.766)Low/no collateral requirement(n.766)Unable to get funding elsewhere(n.816)Low/no credit score requirement(n.76

183、6)Very importantSomewhat importantNot importantN/A30MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experienceIn general,MSME users of digital finance were strongly influenced by platform usage or convenience factors when choosing digital finance platforms.

184、More than 70%of MSMEs considered better customer service and better approval rates as the most important factors when financing through online financing platforms(Figure 10).Additionally,speed in receiving funds,increased transparency including eligibility checks,less complex application process and

185、 flexible terms(such as early repayment and debt rollover)were also deemed important decision-making criteria.This trend was consistent across all business sizes,with more than 90%of businesses considering these factors important in their decision-making process.Notably,medium and small enterprises

186、placed significant importance on swift fund disbursement,whereas micro businesses and sole traders favoured simplified application procedures and flexible repayment terms.Across all levels of education among survey respondents,better customer service,approval rates,and enhanced transparency were con

187、sidered crucial.However,some nuances were noted in the decision-making process depending on the education level of respondents.Those with primary education or below were relatively strongly influenced by the simplified application process,easier verification of business information and limited acces

188、s to alternative funding.Conversely,respondents with undergraduate degrees or higher valued the speed of fund disbursement.Additionally,as noted earlier,11%of respondents indicated that they did not use any traditional finance products during the past 12 months(or throughout 2023).(see Figure 8).Whe

189、n asked about their decision-making criteria,a similar trend to the overall population was observed,where over 50%indicated that all factors were very important.However,55%indicated that a low/no credit score was a key factor,a value higher than that of an overall outcome of 50%(see Figure 10).Notab

190、ly,the majority(46%)of such respondents also reported that they had no major concerns about using a fintech provider to access finance for their business,which was a similar observation in overall outcome where the majority reported no major concerns(see figure 22).31MSME Access to Digital Finance S

191、tudy:In Selected EMDE Countries in Asia5.Fintech financing experiencePARTNER CASE STUDYFintech Platform Du Xiaoman Technology MSME Yunxiangdian Technology Co.Ltd Country Peoples Republic of ChinaBrief history of the companyYunxiangdian Technology Co.Ltd.,located in Yunnan Province,provides an electr

192、icity access service that enables farmers to use electricity for irrigation by scanning a QR code.In the rural and mountainous areas of the province,where extending power lines direct to fields is impractical,farmers typically use their own petrol-powered water pumps and some even illegally connect

193、wires for irrigation,creating environmental,safety,and power grid management problems.Established by Tong Wei,a former employee of a local power supply company,the startup installs car charger-like devices to facilitate power supply for farming operations,improving efficiency,reducing cost for farme

194、rs and boosting the transformation of agriculture through electrification.What obstacles had the company faced in obtaining finance from other sources,such as banks and other financial institutions?Yunxiangdian faces financing difficulty owing to its small scale,lack of collateral(other than self-de

195、veloped electricity access devices)and an unconvincing financial record since its establishment in 2020.The company found that expense recovery for device installation is about two years,while the profit prospect in the irrigation service appears modest.Although the project helps reduce carbon emiss

196、ions,the firm has faced difficulties finding banks or investors interested in investing in their business in the region.Why did this company decide to seek financing through the fintech platform?In March 2022,Yunxiangdian quickly secured a loan of 300,000 yuan(approximately US$42,000)from Du Xiaoman

197、.The speed was attributed to Du Xiaomans innovative and efficient credit scoring system,ease of onboarding compared with the challenging paperwork requirements by traditional financial institutions.Du Xiaomans loans to MSMEs are collateral-free and the online application process is straightforward.T

198、he credit score system can complete analysis by examining more than 400,000 indicators,leveraging technologies such as NLP(Natural Language Processing).How has the received financing impacted the MSME business and operations?With the much-needed loans,Yunxiangdian successfully developed its second g

199、eneration of electricity access device and produced about 3,000 units in 2022.As Yunxiangdian scaled up production and installation,the company also entered into agreement with Yuxi Power Supply Bureau to pilot a cooperation model for irrigation power use.It has become more active in marketing its n

200、etwork of devices for advertisements,such as those for agricultural machinery and fertiliser.32MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experience5.1.1.Primary purpose of borrowing Source:Survey dataNote:Expansion/growth includes purchase of raw mate

201、rials/increase in inventory,business expansion,new product/service development,hiring and recruitment,activities to start the business.Working capital includes payment to suppliers,rent and bills,and covering unexpected business cash flow needs.Asset purchase includes non-property asset purchase(for

202、 example,purchasing machinery),property asset purchase,and purchase of new software/technology.Refinance or Pay other liability”includes consolidate/refinance long-term debts and pay tax/settle a tax liability.Figure 11:Primary purpose of borrowing(n.766)Businesses primarily borrowed from digital fi

203、nance providers to meet their expansion/growth needs(43%)and working capital requirement(36%)(Figure 11).In particular,businesses used finance to pay suppliers(20%),purchase raw materials to increase inventory(15%),cover unexpected business cash flows(such as customer defaults)(9%)and for new produc

204、t/service development(9%).These factors were consistent across businesses of various sizes.Sole traders and micro businesses used finance mainly to pay suppliers and purchase raw materials,whereas small enterprises prioritised asset purchases.Moreover,approximately 9%of the businesses stated they us

205、ed funds borrowed from fintech platforms to start the business they were currently running-a trend notably prevalent among sole traders and females.Refnance or pay other liabilityOtherExpansion/growth43%36%17%2%2%Working capitalAsset purchase33MSME Access to Digital Finance Study:In Selected EMDE Co

206、untries in Asia5.Fintech financing experience5.2.Borrowing experienceSource:Survey dataFigure 12:Information provided during business loan application process(n.766)5.2.1.Loan application process Given the focus of this study is on EMDE countries with a large-scale presence of informal businesses,un

207、derstanding the level of informality among prospective borrowers can reveal information about the ability of fintechs to serve these clients,who usually are underbanked or unbanked.In general,most respondents used necessary business and personal information for their loan applications(Figure 12).How

208、ever,nearly 14%of respondents used only their personal information when applying for business loans,with most of these respondents being sole traders.Further examination revealed that,among these respondents,the majority(30%)did not have all the documents required for a business application.Addition

209、ally,25%of business owners perceived that using personal information resulted in faster loan approval than using business information.Lack of business financial history or credit score(15%),lack of business collateral(13%)and unregistered business(13%)were other key reasons for using personal inform

210、ation in loan applications.Other studies also show that the lack of collateral and insufficient credit history was regarded as the primary financial hurdles faced by small businesses in this region.xxii Further,over half of the respondents considered these factors highly significant when making fina

211、ncing decisions from fintech platforms(see Figure 5.1).Respondents who used personal information exclusively for business loan applications were largely from India and the PRC and typically possessed education levels at or above technical education.Additionally,these respondents largely perceived a

212、faster approval process using personal information.62%24%14%0%10%20%30%40%50%60%70%I applied for the loan using bothbusiness and personal informationI applied for the loan using mybusiness information onlyI applied for the loan using mypersonal information only34MSME Access to Digital Finance Study:

213、In Selected EMDE Countries in Asia5.Fintech financing experienceSource:Survey dataFigure 13:Amount borrowed through digital lending platforms in the past 12 months(2023)(n.604)5.2.2.Amount borrowedRespondents were asked how much they had borrowed in total in the past 12 months(or throughout 2023)fro

214、m their primary fintech platform/lender.After excluding outliers,for MSMEs that used a digital lending platform to get financing,the median amount borrowed across the analysed countries was USD 1,412,while the average ticket was slightly over USD 5,400(Figure 13).Approximately 45%of the businesses N

215、ote:*79 outliers(too far/extreme values)were excluded from the analysis.The calculation to find higher outliers was applied in the full dataset.Formula:Outliers=Quartile 3+(1.5*Quartile 3 Quartile 1).*The figure X in the boxplot7 represents the mean.borrowed less than USD1,000,21%borrowed between US

216、D1,000 and USD5,000,and another 21%above USD10,000.As noted in the previous sections,MSMEs mainly used finance to meet their working capital(36%)and expansion(43%)needs.In particular,sole traders and micro businesses borrowed mainly to pay suppliers and purchase raw materials,while small and medium

217、businesses focused on asset purchase.*Although it was a mandatory open-text question,respondents could report“0”to skip the answer.Zero/nil values were also excluded from calculations.*Amounts that were reported in local currencies were converted into US dollars(USD)using an average rate quoted by G

218、oogle Finance.7.A boxplot is a type of chart often used in explanatory data analysis.It shows the distribution of numerical data and skewness by displaying the data quartiles(or percentiles)and averages.Boxplots show the five-number summary of a dataset,including the minimum value,first(lower)quarti

219、le,median value,third(upper)quartile and maximum value.)USD 22,000 USD 288 USD 1,412 USD 9,000 USD 5,430 USD 0 USD 0 USD 5,000 USD 10,000 USD 15,000 USD 20,000 USD 25,000 35MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experienceThe amount borrowed varies

220、 depending on the size of the business and the mode of operation(Table 3).Businesses with formal premises,such as merchants with stores and commercial buildings,tend to secure higher financing amounts,with an average of USD 9,081 for stores and USD 10,709 for commercial buildings.Conversely,business

221、es operating from a residence or entirely online face challenges and typically secure lower borrowing amounts,at an average of USD 788 and USD 2,534,respectively.This discrepancy can be associated with the risk management decisions of traditional lenders that perceive physical premises as more stabl

222、e and credible,which positively impacts their lending decisions.xxiii The amount borrowed also depends on the financing purpose and is also influenced by the business categories/models of participating fintech platforms.For example,invoice trading fintech platforms offer loan sizes generally higher

223、when compared to P2P or balance sheet business lending platforms(in this study,the average amount borrowed on P2P or balance sheet business lending was USD 5,551 vs.USD 13,131 on invoice trading platforms,see Table 4).This discrepancy could potentially affect the data on borrowed amounts,both at a c

224、ountry-specific level and overall.Table 3:Amount borrowed,by business size and mode of operation in the past 12 months(2023)Source:Survey dataNote:*Outliers and zero/nil values were excluded from calculations.*Values with a low response rate(n3)are not shown in the table.Business sizeMode of operati

225、onAmount borrowedMedianMeanSole proprietor/Sole trader(one person)Merchant with store(separate premises)(n.188)USD 4,450 USD 6,173Merchant without store(n.21)USD 1,200 USD 3,893 Office/Factory/Industrial building(n.34)USD 2,200 USD 6,731 Online-only or e-commerce(n.16)USD 750 USD 2,021 Operated from

226、 residence(n.110)USD 360 USD 536Retail agent(n.38)USD 2,610 USD 6,050 Micro(fewer than 10 employees)Merchant with store(separate premises)(n.57)USD 3,150 USD 6,253 Merchant without store(n.4)USD 1,500 USD 6,275 Office/Factory/Industrial building(n.14)USD 704 USD 6,355 Online-only or e-commerce(n.6)U

227、SD 690 USD 1,560 Operated from residence(n.11)USD 252 USD 2,024 Retail agent(n.8)USD 7,620 USD 7,857 Small(10 to 49 employees)Merchant with store(separate premises)(n.25)USD 9,000 USD 9,386 Merchant without store(n.5)USD 3,600 USD 9,190 Office/Factory/Industrial building(n.20)USD 9,525 USD 11,475 On

228、line-only or e-commerce(n.3)USD 8,100 USD 7,260 Operated from residence(n.4)USD 3,690 USD 7,256 Retail agent(n.5)USD 360 USD 4,829 Medium(50 to 249 employees)Office/Factory/Industrial building(n.10)USD 2,680 USD 6,608 36MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech

229、 financing experienceTable 4:Amount borrowed,by fintech business models in the past 12 months(2023)Source:Survey dataNote:*Outliers and zero/nil values were excluded from calculations.Fintech business models/amount borrowedMedianMeanInvoice trading(n.41)USD 10,571 USD 13,131 P2P or balance sheet bus

230、iness lending(n.460)USD 2,225 USD 5,771 Merchant cash-advance(n.29)USD 1,200 USD 2,090 Crowd-led microfinance(n.74)USD 306 USD 3575.3.Ability to get funding from another sourceSource:Survey dataFigure 14:Ability to get funding from another source(n.766)MSMEs were asked about their ability to raise t

231、he same amount(as borrowed with the fintech platform)from another source.Nearly one-third were unsure,while more than half of the respondents(57%)believed they could(Figure 14)-despite nearly 80%of respondents reporting that the inability to get funding elsewhere was an important decision-making fac

232、tor in opting for fintech financing(see Figure 10).Additionally,11%believed they would not have been able to raise the amount elsewhere,other than through a fintech provider.Among those,35%cited high interest rates,33%mentioned various loan application issues(complexity,lack of documents,or collater

233、al),and 14%pointed to the difficulty in getting a bank loan for their business.These businesses,mainly located in Pakistan and run by females with little formal education,were predominantly sole traders and/or micro enterprises.Furthermore,the effects of high interest rates can negatively impact MSM

234、E profit margins.As noted by OECD(2024),xxiv in 2022,the median loan interest rate for MSMEs increased by 1.1 percentage points,and for each percentage point increase,a decrease of 0.35 percentage points in profit margins was expected.57%32%11%0%10%20%30%40%50%60%YesNot sureNo,please describe37MSME

235、Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experiencePARTNER CASE STUDYFintech Platform Micro Connect MSME Mr.Judy Country Peoples Republic of ChinaBrief history of the companySince its inception,Mr.Judy has been committed to providing high-quality scalp an

236、d hair care services,emphasizing a relaxed and enjoyable beautification experience.The brand now boasts over 300 stores across more than 12 first-tier cities in the PRC,including Beijing,Shanghai,Guangzhou,Shenzhen,Chengdu,and Hangzhou,and has become a leader in the beauty and wellness industry,comm

237、itted to advancing hair care technology and driving industry transformation.What obstacles had the company faced in obtaining finance from other sources,such as banks and other financial institutions?In 2021,Mr.Judy encountered significant financial challenges due to the impact of the COVID-19 pande

238、mic,which severely affected cash flow and hindered the companys ability to secure traditional financing.Banks were reluctant to extend loans to the company,particularly due to the high collateral requirements and the uncertain economic environment.Like so many other MSMEs affected by the pandemic,Mr

239、.Judy struggled to sustain operations and continue expansion plans.Why did this company decide to seek financing through the fintech platform?In October 2021,Founder and CEO of Mr.Judy,Wang Jianlin,initiated discussions with Micro Connect,a global exchange platform for the revenue-sharing asset clas

240、s,representing Macaos new endeavor to promote innovative finance.Micro Connect offered an innovative financing solution through revenue-based financing(RBF),specifically designed to meet the financing and development needs of micro and small businesses,particularly those with physical storefronts.Th

241、is model provided Mr.Judy with a flexible,non-dilutive source of capital that did not require collateral or equity stakes.How has the received financing impacted the MSME business and operations?The partnership with Micro Connect provided Mr.Judy with a total of 20 million yuan(approximately USD 2.7

242、4 million)in financing,across nearly 100 locations.This capital infusion enabled the company to navigate the economic challenges posed by the pandemic while continuing strategic expansion.The flexible repayment terms of the RBF model,which involved sharing a small percentage of daily revenues with M

243、icro Connect,ensured that Mr.Judy could manage cash flow effectively.The financing from Micro Connect also allowed Mr.Judy to innovate and refine its service offerings.Additionally,the rapid business expansion resulted in increasing employment opportunities,particularly for young people in remote ar

244、eas and individuals with disabilities,further highlighting the social impact of this partnership.38MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experience5.4.Frequency of use of fintech platformsSource:Survey dataFigure 15:Frequency of use of fintech pla

245、tforms(n.749)Half of the businesses(52%)reported financing from a digital lender only once in the last 12 months(or throughout 2023)(Figure 15).Another 48%used fintech platforms more than once to finance their businesses,with 32%of these businesses using the same fintech platform to do so and anothe

246、r 16%using multiple fintech lenders.Investigating business sizes,sole traders and small businesses tended to use the same fintech lender for multiple borrowings,whereas medium enterprises showed a preference for multiple fintech lenders.This distinction could be influenced by varying fund requiremen

247、ts relative to business size and considering a potential cap on the maximum amount that can be financed through fintech platforms.Businesses operating in India and the PRC reported using multiple fintech lenders for financing their businesses,while repeated borrowings from single fintech lenders wer

248、e prominent in Bangladesh,Viet Nam and Kazakhstan,reflecting the concentration of fintech lenders in these countries.52%32%16%0%10%20%30%40%50%60%OnceMore than once;from the same fntech lenderMore than once;from multiple fntech lenders39MSME Access to Digital Finance Study:In Selected EMDE Countries

249、 in Asia5.Fintech financing experienceSource:Survey dataFigure 16:Loan repayment status(n.766)5.4.1.Loan Repayment StatusMost surveyed MSMEs were able to repay loans taken from digital finance providers.68%never missed a payment,while 21%initially struggled but eventually repaid with some delay or l

250、ender support(debt rollover or a new loan to pay off the old one)(Figure 16).This was more evident in Bangladesh,India and Kazakhstan,where over 20%of entrepreneurs struggled to repay their debts initially and eventually did so with some support.Notably,the overall default rate was less than 1%,prim

251、arily driven by small businesses rather than sole traders.For all countries,the overall default rate of surveyed MSMEs was lower than the countries non-performing loans ratio.xxv 1%3%6%18%72%0%10%20%30%40%50%60%70%80%Defaulted on loanUnable to repay but the platform rolled over my debt/ofered me a n

252、ew loanPrefer not to answerUnable to repay but did eventuallyrepaid the full amount with some delayNever missed a payment40MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experienceSource:Survey dataFigure 17:Business financing needs met through digital fin

253、ance in the past 12 months(2023)(n.754)5.4.2.Business financing needs met through digital financeMost businesses(80%)noted that less than half of their financing needs came from digital finance platforms,with a larger proportion covering less than 25%(Figure 17).Conversely,the remaining 20%reported

254、that more than half of their financing needs were met through online finance.This trend was predominantly observed among female-led businesses,sole traders and businesses located in Kazakhstan and Pakistan.When looking at business size,almost 88%of micro-businesses indicated that 50%or less of their

255、 financing needs were met by digital finance providers.In contrast,14%of sole traders reported that these providers were able to meet more than three-quarters of their business financing needs(Table 5).Overall,digital finance providers partially fulfil the financing requirements of MSMEs,mostly supp

256、orting those businesses to cope with their short-term needs(i.e.pay suppliers and cover unexpected cash flows).This suggests that there is still a potential market opportunity for financial services providers to contribute in closing the financing gap.Table 5:Business financing needs met through dig

257、ital finance in the past 12 months(2023),by business sizeSource:Survey dataBusiness size/Financing needs metLess than 25%25%to 50%51%to 75%More than 75%Sole proprietor/Sole trader(n.489)41%37%8%14%Micro(n.138)47%41%9%3%Small(n.90)35%44%18%3%Medium(n.37)46%32%19%3%42%38%10%10%0%5%10%15%20%25%30%35%40

258、%45%Less than 25%25%to 50%51%to 75%More than 75%41MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia5.Fintech financing experiencePARTNER CASE STUDYFintech Platform iFarmer Sole proprietor Bayezid Bostami Country BangladeshBrief history of the entrepreneurIn the heart of Shahjah

259、anpur,Bogra,a small agricultural retail shop named MasumTraders was struggling to survive.Bayezid Bostami,the owner,had seen countless days where his worries outweighed his hopes.The farmers he served were facing challenges,too inadequate income,unpredictable weather,and limited access to quality ag

260、ricultural inputs.What obstacles had the business faced in obtaining finance from other sources,such as banks and other financial institutions?One of the most significant challenges Bayezid faced was limited financial resources.He had a troubled history with loan sharks,who often resorted to extorti

261、on and intimidation to collect payments.This had a devastating effect on his business and emotional well-being.Why did this business decide to seek financing through the fintech platform?iFarmer stepped in with a tailored financial plan.They offered a line of credit that was not just a loan;it was a

262、n investment in his future.With this newfound financial freedom,he could expand his inventory,offer a wider range of products,and even hire additional staff to provide better customer service.How has the received financing impacted the MSME business and operations?The impact was immediate.Farmers fl

263、ocked to Masum Traders,drawn by the quality agri input products and the tailored advisory service that Bayezid offered.His business grew exponentially,and his stress was alleviated.Today,Masum Traders is more than just a shop;it is a community hub.Farmers come not just for supplies but also for advi

264、ce and support.His story is a testament to the power of partnership and the transformative impact of financial support.42MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia1.Introduction6.OUTCOME OF FINANCING43MSME Access to Digital Finance Study:In Selected EMDE Countries in Asi

265、a6.Outcome of financing6.1.Impact on business indicators Source:Survey dataFigure 18:Business change due to financing(n.819)Analysing the impact of digital finance on various aspects of business is crucial to understanding the effects felt by MSMEs after receiving finance from fintechs.The direct ef

266、fects of financing on business indicators such as revenue and costs signal the impact on the business operation and financial health.According to Adamek and Solarz(2023)xxvi in a study of Polish digital lending customers,a positive perception of the borrowers business financial health influences cus

267、tomers attitude towards the use of digital lending services,improving the adoption of digital finance services.Likewise,the greater the use of digital finance products and services,the more support is expected in access to finance for MSMEs,which in turn,may also impact(positively)their relationship

268、 with traditional financial providers.Overall,businesses reported an increase in their business performance as a result of financing through digital finance platforms.Access to finance through digital finance providers generated significant changes to MSMEs business indicators;over three-quarters of

269、 businesses noted an increase in their revenue(82%),profit/net income(79%)and customer base(79%)(Figure 18).While this trend was particularly pronounced among sole traders,a significant majority of businesses(70%)across different sizes reported growth in these three metrics.The results for MSMEs tha

270、t participated in this study were better for revenue and profit/net income compared to their peers from the ASEAN region who participated in the previous CCAF ASEAN Access to Digital Finance Study(2022),xxvii where most businesses also reported a positive impact in both indicators(about 60%).Regardi

271、ng employment,48%of MSMEs reported no change in this indicator with another 6%(mainly sole traders and micro-entrepreneurs)unsure.However,more than half of medium and small businesses did report an increase in employment,highlighting varying workforce needs across different business sizes.45%63%79%7

272、9%82%48%24%16%12%13%1%7%1%3%2%6%6%4%6%3%0%10%20%30%40%50%60%70%80%90%100%Number of employeesBusiness costsNumber of customersProfit/net incomeRevenueIncreasedNo changeDecreasedCant tell or unsure44MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia6.Outcome of financingConversely

273、,most MSMEs reported an increase in their business costs due to digital financing,which was felt more by sole traders.The trend in increasing business costs was strongly related to the business size(sole trader:70%increase;micro:54%increase;small:49%increase;medium-size:46%increase).The smaller the

274、business,the heavier the weight of the loan in these businesses balance sheets.PARTNER CASE STUDYFintech Platform Funding Societies MSME Vinh Phat Company Country Viet NamBrief history of the entrepreneurNguyen Hai Thanh Binh launched his furniture business in 2014 with a vision to blend elegance wi

275、th excellence in producing quality furniture.With a masters degree in finance and a career background in state-owned investment firms and water infrastructure,Binhs entry into the furniture world was initially a side project sparked by friends encouragement.Begun in a modest 300m factory for domesti

276、c clients,it quickly evolved by 2019 to become a sprawling 4,000m facility.What obstacles had the company faced in obtaining finance from other sources,such as banks and other financial institutions?Vinh Phat Company navigated a turbulent financial landscape with resilience.Initially working with a

277、financial institution,Nguyen Hai Thanh Binh transitioned to a traditional bank during the COVID-19 pandemic,seeking enhanced online services.Despite a long-standing relationship,the bank did not offer unsecured credit,and they also required collateral,specifically in the form of a family asset.Addin

278、g to the complexity,there was the relocation of the banks branch manager,leaving Nguyen Hai Thanh Binh to forge a new connection with the bank from the ground up,transforming each challenge into an opportunity for reinvention.Why did this company decide to seek financing through the fintech platform

279、?To overcome these hurdles in securing financial backing,Vinh Phat Company turned to Funding Societies,a game-changer in their quest for capital.Unlike a traditional bank,which required collateral and imposed stringent conditions on loans and credit facilities,Funding Societies stood out by offering

280、 unsecured credit with far more flexibility.The platforms user-friendly application process and adaptable terms provided Vinh Phat with a much-needed lifeline,perfectly tailored to meet the companys evolving financial needs and empower their continued growth.How has the received financing impacted t

281、he MSME business and operations?The infusion of funds from Funding Societies was a turning point for Vinh Phat Company,dramatically boosting its working capital.This surge in financial resources propelled the companys revenue from 18 billion VND in 2022,to a remarkable 34 billion VND in 2023.With en

282、hanced cash flow,Vinh Phat was able to scale its operations,attracting more customers and efficiently managing the lengthy 120-150 day order cycle.This financial uplift not only spurred substantial revenue growth,but also fuelled significant business expansion.Vinh Phat Company had crossed internati

283、onal borders,marking its debut in the U.S.market.Today,Vinh Phat serves both locally and around the globe.45MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia6.Outcome of financing6.2.Direct effects of financing Source:Survey dataFigure 19:Business impact due to financingWhen as

284、ked about the consequences of financing from fintech providers,surveyed MSMEs reported more positive impacts than negative,highlighting the importance of access to finance for healthy business operations.The number one effect of financing was businesses expanding their operations(40%),particularly n

285、oted by medium and small enterprises(Figure 19).Further,about a third of surveyed MSMEs reported purchasing assets for their businesses and increasing their inventory/raw materials(34%and 33%,respectively),largely by small and micro businesses.Additionally,5%of respondents indicated that they applie

286、d for and received funding elsewhere as a direct effect of fintech financing.A closer look at their subsequent financing sources shows that nearly half of these businesses obtained subsequent funding from traditional finance providers such as banks,a trend mainly observed among sole traders.This asp

287、ect of fintech impact is significant,especially since businesses across Asia face challenges such as insufficient credit history and lack of collateral requirements when seeking financing from formal or traditional sources.xxviii Another 32%reported obtaining finance from other fintech platforms and

288、 smaller percentages from other sources such as private equity and government funds.Fintech credit seems to have a positive effect on MSMEs creditworthiness,as only 4%were refused credit by a supplier or a bank.This is significantly lower compared to their peers(reported 12%for the same indicator)in

289、 the ASEAN region,as described in the ASEAN Access to Digital Finance Study(2022).Conversely,the top negative effects reported were that 5%of businesses experienced an uncomfortable increase in debt due to fintech financing and another 3%attracted negative attention.40%34%33%17%5%5%4%3%2%2%0%5%10%15

290、%20%25%30%35%40%45%Expanded to newmarket(n.329)Purchased assetsfor business(n.275)Increased inventory(n.271)Paid of existing loan(n.143)Applied for and received funding elsewhere(n.42)Total amount of debt increased uncomfortably(n.41)Been refused credit by asupplier or a bank(n.30)Attracted negative

291、 attention(n.21)Missed a loan repayment to another provider(n.20)Other(n.20)46MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia6.Outcome of financingPARTNER CASE STUDYFintech Platform Validus MSME A Tuan Khang Joint Stock Company Country Viet NamBrief history of the companyA Tu

292、an Khang Joint Stock Company,established in December 2003,with a factory located in Ben Tre,has laid a strong foundation for producing high-quality spice products.Overcoming numerous challenges,the company has positioned itself as a leading player in Viet Nams traditional spice manufacturing and tra

293、ding sector.The company offers a wide variety of products,including Ben Tre speciality coconut water,vinegars,satay preparations and other condiments that complement Vietnamese cuisine.What obstacles had the company faced in obtaining finance from other sources,such as banks and other financial inst

294、itutions?A major challenge for MSMEs in Viet Nam is that most banks in Viet Nam require collateral for loan applications.Procedures are complex and involve lengthy pending periods for approvals,which stifle progress of MSME business operations who do not have the margin to sustain business while awa

295、iting decisions.Why did this company decide to seek financing through the fintech platform?A Tuan Khang Joint Stock Company became aware of Validus through its invoice financing program in collaboration with Bach Hoa Xanh.In addition to providing prompt support,simple documentation procedures,and co

296、mpetitive interest rates,Validus offers a fully online onboarding and documentation process,facilitating easier access to capital.Validus also provides other solutions,including invoice financing and working capital loans,which help bridge capital shortfalls.How has the received financing impacted t

297、he MSME business and operations?Receiving funding enabled the company to expand its business and minimise cash flow for reinvestment in production and inventory procurement.This has resolved debt issues when supplying goods to supermarket chains,significantly increasing business revenue and helping

298、the company navigate through economic challenges.47MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia6.Outcome of financing6.3.Impact on banking relationship Source:Survey dataFigure 20:Traditional banking relationship impact(n.819)In general,MSMEs relationships with traditional

299、 financial service providers such as banks increased as a result of financing through fintech platforms.Over 60%of businesses reported they began using or increased their usage of savings and checking accounts,a trend largely observed among micro and sole businesses(Figure 20).At the country level,m

300、ore than 40%of MSMEs from Bangladesh and Pakistan reported that they had started to use savings and checking accounts,while one-third of respondents from India noted an increase in frequency of usage.Further,more than 45%reported they began or increased their use of credit products(overdrafts,loan c

301、ontracts)and payment products(cheques,debit/credit cards,PoS systems),particularly among small businesses.Many MSMEs operating in Bangladesh,India,Mongolia and Kazakhstan reported beginning to use credit and payment products,while a large number of businesses in Viet Nam reported an increase in thei

302、r use of these products after financing through digital platforms.These results suggest that digital finance platforms are effectively enhancing financial inclusion and encouraging broader financial engagement and literacy among MSMEs,especially in Pakistan and Bangladesh,which,according to the Worl

303、d Bank Findex data(2021),xxix suffer more from low account ownership(21%and 53%respectively)and low credit/debit card ownership(8%and 5%respectively).Began usingIncreased usageAbout the sameDecreased usageN/A37%24%27%25%22%19%21%17%20%4%11%6%13%26%28%0%10%20%30%40%50%60%70%80%90%100%Savings or check

304、ing accountsCredit productsPayment products48MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia6.Outcome of financing6.4.Concerns about using digital finance providers for business financing Source:Survey dataFigure 21:Major concerns of business financing through digital finance

305、 providersAs noted in previous sections of this study,a negative user experience can lead to issues in the adoption of digital finance services,limiting financial inclusion and innovation.MSMEs were asked about their concerns toward using digital fintech providers in accessing finance for their busi

306、nesses.Over half of the surveyed MSMEs(56%)that financed their business through digital finance platforms reported no major concerns,indicating a strong positive perception and trust in fintech solutions(Figure 21).This suggests that fintech providers have successfully addressed major pain points fo

307、r most users.However,some challenges remain.Specifically,26%of businesses cited difficulty in operating devices,which is particularly prevalent among respondents with lower education or below secondary level education.This highlights a need for user-friendly interfaces and better educational outreac

308、h for less tech-savvy users.More than half of the respondents from Bangladesh highlighted this issue.Additionally,19%of businesses reported a lack of understanding about fintech products and services,and 12%noted a lack of transparency in borrowing costs.These concerns were more common among those w

309、ith undergraduate degrees and technical education,suggesting that even educated users need clearer information(transparency)and simpler terms from fintech providers.A relatively higher proportion of businesses from Viet Nam(35%)and India(24%)expressed concerns related to lack of understanding about

310、fintech products and services.Similarly,around one-fifth of businesses in India,Mongolia and the PRC reported concerns about lack of transparency on borrowing costs.Less than 5%of respondents felt there was a higher chance of fraud and scams with fintech providers compared to traditional finance pro

311、viders.This indicates that overall trust in digital finance services is high among surveyed MSMEs in the Asia region.56%26%19%12%7%4%0%10%20%30%40%50%60%Difculty in operating a personal computer,mobile device or phone well(n.214)Lack of understanding about fntech products&services(n.158)Lack of tran

312、sparencyinterms of cost of borrowing(n.98)Other(n.59)Higher chance of fraud and scams with fntech than with other providers(n.36)No majorconcerns(n.458)49MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia1.Introduction7.GENDER-RELATED DATA50MSME Access to Digital Finance Study:I

313、n Selected EMDE Countries in Asia7.Gender-related data7.1.DemographicsGlobally,women-led businesses tend to encounter more barriers to accessing finance than their male peers.This is due to various factors,such as less asset ownership,smaller businesses,fewer employees,higher level of informality an

314、d more challenges in growing their business compared to male-led businesses.xxx This results in a shorter credit history,widening the gender gap:according to the World Economic Forum(2024)xxxi today it would take 134 years to reach full gender parity.However,financial institutions can set gender-int

315、entional strategies to improve womens access to finance,such as gender-disaggregated data analysis to increase The sample considered in this study has a high concentration of male respondents,which is to be expected given the market characteristics of many of the countries surveyed.For instance,Sout

316、h Asia has one of the lowest rates of female labour force participation(25.6%).xxxii Some of the economies we considered have a highly male-concentrated MSME market,as noted by the SME Finance Forum(2017),especially in Bangladesh,India and Pakistan(where 95%,93%,and 92%of MSMEs were owned by males,r

317、espectively),along with Viet Nam(where 98%of MSMEs were owned by males).Surveyed female owners tended to run smaller businesses.81%of females reported they were sole traders or led micro enterprises,compared credit scores and lower financial risks,as evidence shows that women tend to have better loa

318、n repayment rates compared to men.Lenders can enlarge their portfolios by lowering risks and increasing the number of loans to female customers.In this context,the study aims to provide a gender analysis that compares female-led and male-led businesses and an overview of the possible benefits of dig

319、ital finance services towards financial inclusion-assuming that fintech firms are better positioned to offer innovative solutions to close gender gaps.with 66%of males(Figure 22).This is in line with IFC(2023),which notes that female-led firms are smaller than the median size of MSMEs that look for

320、traditional channels of financing.This characteristic sums up the financing constraints faced by women,who face significant challenges regarding collateral requirements.Additionally,in a similar trend,female owners had attained lower levels of education,with a much higher proportion(17%)of responden

321、ts who did not attend school,than males(3%).Conversely,there were more female owners with a technical education or vocational training(11%,compared with 7%)(Figure 23).51MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia7.Gender-related dataSource:Survey dataSource:Survey dataFi

322、gure 22:Gender-based demographics of survey distribution:business size Figure 23:Gender-based demographics of survey distribution:education levelFemale(n.179)Male(n.628)Sole proprietor/Sole trader(one person)Micro(fewer than 10 employees)Small(10 to 49 employees)Medium(50 to 249 employees)6%63%18%13

323、%14%10%17%59%3%10%32%7%38%11%17%13%17%11%34%8%0%5%10%15%20%25%30%35%40%Did not attend schoolPrimary or elementary level schoolSecondary level school/high schoolTechnical education or vocational trainingUndergraduate degree(Bachelors)Postgraduate certifcate(Masters degree,or above(PhD)Female(n.179)Ma

324、le(n.628)52MSME Access to Digital Finance Study:In Selected EMDE Countries in Asia7.Gender-related data7.2.Use of traditional finance facilitiesSource:Survey dataFigure 24:Gender comparison:use of traditional finance in the past 12 months(2023)Measuring MSME owners relationships with traditional fin

325、ance provides an overview of the level of access to traditional financial products and reveals possible gaps.As highlighted by the IMF(2023),even with the rise in account ownership,the gender gap for this indicator is still substantial in many countries.xxxiii Personal current accounts and personal

326、and business loans were the most popular financial products among female and male entrepreneurs.*N/A:respondent had not used any traditional finance products/services in the past 12 months(or throughout 2023).Gender analysis revealed that while 49%of female business owners had personal current accou

327、nts compared to 36%of male business owners,both genders equally had access to business loans(37-41%)and personal loans(34%).However,a notable disparity was observed in personal savings account ownership,with males twice as likely to have them(25%vs.12%),suggesting potential gender differences in fin

328、ancial savings capacity(Figure 24).*Other financial products or instruments that may cater to businesses.Male(n.628)Female(n.179)0%5%10%15%20%25%30%35%40%45%50%Personal current accountPersonal loanPersonal checking or savings accountPersonal debit/credit cardBusiness loanBusiness savings/checking ac

329、countBusiness credit cardMortgage,bridge loan or another secured loan from a bank/specialist providerOverdraft accountsOther*PersonalfnancialproductsBusinessfnancialproductsOtherfnancialproductsN/A*7%13%41%7%9%37%20%25%34%36%20%12%34%49%2%8%9%4%6%10%13%4%53MSME Access to Digital Finance Study:In Sel

330、ected EMDE Countries in Asia7.Gender-related data7.3.Previous financing from other sourcesSource:Survey dataFigure 25:Gender comparison:previous financing applications from other sources Before turning to a digital finance provider to support their business,females were less likely than males to hav

331、e sought funding from other financial sources.For most sources,females tended to have a lower success rate than males.Males were slightly more successful in receiving bank funding compared to females(55%vs.58%),but females were significantly more successful in obtaining microfinance funding(88%vs.59

332、%),highlighting the role of microfinance in promoting gender equality.Research supports the role of microfinance in improving womens economic status,health,and education levels and highlights their higher repayment rates,indicating good credit risk.xxxiv Additionally,family and friends were slightly

333、 more supportive of males(55%vs.47%)(Figure 25).45%43%39%41%59%54%55%67%58%73%24%32%34%35%88%67%47%66%55%73%0%10%20%30%40%50%60%70%80%90%Of those that received fundingRespondents that sought fundingOf those that received fundingRespondents that sought fundingOf those that received fundingRespondents that sought fundingOf those that received fundingRespondents that sought fundingOf those that recei