We’ve covered the ongoing global need for increased SME support—especially at the lower end of the spectrum in terms of systems and liquidity—throughout various postingsand member research. This dynamic is generally true across multiple geographies, but particularly with respect to developing markets such as in Asia.
A press release, posted in asiaone, recently announced that Finastra will help build an SME-focused neobank for the Vietnam market with Vemanti Group, the Nevada-based firm that works primarily around building fintech capabilities in Vietnam and Southeast Asia. The core banking platform will be Finastra’s Fusion Essence. The release states that this is the first of its kind in the region. In addition, another Finastra partner named Lendscape, a London-based provider of business finance solutions, will be incorporating its capabilities into the mix.
The definition of SME varies by region. In Vietnam that sector is more or less the equivalent of micro and small businesses in the U.S., that is, annual revenues up to VND 300 billion (roughly USD 10 million). The Asian Development Bank (ADB) has estimated that the global liquidity shortfall for SMEs is in the range of $1.5 trillion.
The Finastra core banking platform Fusion Essence is a SaaS platform running on Azure. It solves for both retail and commercial banking business models, which is fine for many small businesses since micro-versions typically behave as retail accounts anyway. The core banking solution has the capabilities one would expect for next generation (and future-proofed) banking, including use of advanced analytics, artificial intelligence, APIs and open banking. To our knowledge, this is not a regulatory requirement, but is increasingly being adopted in Vietnam, as well as across southeast Asia.
The Lendscape capabilities include invoice finance and factoring, which is on the receivables side, as well as other forms of supply chain finance, which covers both buyer and supplier financing options, as we recently covered in member research. Small businesses are typically strapped for cash, so traditional financing options are often inaccessible and expensive even when available. Alternative, short-term financing (usually 90 days or less) is just what the doctor ordered.
Overview by Steve Murphy, Director, Commercial Advisory Service at Javelin Strategy & Research.