Funding Societies swipes right on payments in SEA

After raising US$294 million and entering Vietnam, Singapore-based online lender Funding Societies is setting its sights on a new target: digital payments.

Many of Southeast Asia’s largest tech companies are already in the space, which is – by some accounts – a red ocean. Case in point: When players such as Grab, Gojek, and Shopee launched financial services, they began with an e-wallet, fiercely competing for users before adding services like lending and buy now, pay later.

Iwan Kurniawan, group chief growth officer at Funding Societies/Modalku. Photo credit: Funding Societies

By acquiring Singapore-based payments firm CardUp and rolling out an SME virtual card, Funding Societies, which has disbursed over US$2.8 billion in loans since its launch in 2015, is essentially doing the opposite.

Many SMEs, particularly the younger and smaller ones are not getting the credit solution they need, Iwan Kurniawan, group chief growth officer at Funding Societies/Modalku, tells Tech in Asia.

The firm has been open about its neobanking ambitions. In April, Funding Societies announced an undisclosed investment in Indonesia’s Bank Index, which marked the company’s entry into the space.

See also: Funding Societies raises $40m, but streamlines its business amid Covid-19

That said, such a path isn’t unique to the firm. Other lending firms with neobank ambitions have pursued a similar strategy. For example, Validus in Singapore and KoinWorks in Indonesia – both also started out as digital lenders – have introduced complementary payment or payment-related services.

Against its neobank rivals, however, Funding Societies has a key advantage: Its core lending business is already present across five markets including Indonesia, where it operates under the Modalku name.

Betting on payments

In entering the “less digitized” business payments segment, Funding Societies joins the likes of Singapore-based YouTrip and UK-headquartered Wise that offer corporate cards for SMEs with credit and transfer functions, as well as expense management. All are eyeing a regional digital payments sector set to be worth over US$1 trillion by 2025.

Funding Societies’ group leadership team / Photo credit: Funding Societies

In March, Funding Societies launched Elevate, a virtual card that provides interest-free credit to qualified MSMEs in Singapore for a period of up to 55 days. Unlike bank alternatives, no personal guarantees are required for limits under S$30,000 (US$20,901).

The company claims that Elevate will close the “80% corporate credit card gap” in the city-state’s MSME sector, giving smaller and younger firms access to payments or card solutions for “the first time,” says Kurniawan.

Banking aspirations?