From China with love: Digital banks ANEXT and GLDB aim to fill SME lending void in SG

Singapore is one of the most highly banked societies in the world, with 98% of its adult population having a bank account.

Despite that high number, there are still niche segments that remain untapped, such as small and medium-sized enterprises (SMEs).

Why SMEs matter

In Singapore, 99% of enterprises are SMEs. They employ 71% of the city-state’s workforce and contribute US$210 billion in value to the economy, according to the country’s Department of Statistics.

However, a report by SaaS cloud banking platform Mambu found that 86% of SMEs in Singapore couldn’t secure sufficient funding to cover their business needs on at least one occasion over the last five years.

Instead, most SME owners in Singapore end up seeking funds from their friends and family or business partners.

Recognizing the need for more players in the SME lending space, the Monetary Authority of Singapore (MAS) accepted four digital bank license applicants in 2020. MAS issued digital full bank licenses to Grab and SingTel’s joint venture GXS and Sea’s MariBank as well as wholesale digital bank licenses to ANEXT Bank and Green Link Digital Bank (GLDB).

These licenses allow their holders to take deposits and provide banking services to SMEs and other non-retail customer segments.

ANEXT is a wholly owned subsidiary of Alibaba affiliate Ant Group. The fintech giant launched MyBank, a digital bank that focuses on serving SMEs and farmers, in 2015.

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Meanwhile, GLDB is owned by Greenland Group, a Chinese real estate developer and state-owned enterprise, and Linklogis, a Hong Kong-listed supply chain financing platform.

The China connection

Both ANEXT and GLDB can draw on their parent firms’ experience in mainland China.

“ANEXT plans to focus on SMEs, specifically on Singapore-based SMEs with operations overseas. It’s a very defined niche for which the company plans to leverage its expertise from its earlier experience in China, given MyBank is one of the few digital banks globally that has been operating profitably,” Zennon Kapron, director of Singapore-based research firm Kapron Asia, tells Tech in Asia.

Kapron Asia’s analysts think ANEXT may have the clearest market potential out of the four holders of digital bank licenses in Singapore as its parent Ant Group has a wealth of experience in digital financial services that the others lack.

Ant Group told Tech in Asia that as of 2022, MyBank has been serving more than 49 million SMEs by using technology to solve a lending pain point faced by traditional Chinese banks.

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