While it's usually unwise to paint trends in Asia with a broad brush, the FinTech Revolution has fundamentally changed how people think about financial services. In practical applications, we see its effects on micro, small and medium-sized enterprises (MSMEs) all across Asia. Though small, their impact is huge: Collectively, these enterprises make up more than 96% of all Asian businesses.
Leading the charge in transforming these small businesses on the back of Asia’s Fintech Revolution are local founders and champions of developing markets.
Serving the unbanked, enabling financial inclusion
Around 60 million MSMEs operate in India today, employing more than 11 million people and contributing to around 30 percent of India’s GDP. Yet around 40 percent of these MSMEs still resort to informal sources of credit.
Platforms like Udaan are trying to change traditional ways of trading and selling. Udaan is a network-centric B2B trade platform that connects manufacturers and wholesalers with retailers online.
“Most small retailers or merchants don’t have formal credit histories,” shares Vaibhav Gupta, co-founder of Udaan. “It’s typically very difficult for them to actually get a loan or a working capital line from a financial institution like a bank.” This means most of them turn to friends, family, suppliers or even predatory lending services for credit.
Gupta saw this as a key issue that he wanted addressed immediately. “We create credit lines for the small merchants based on transaction and usage behaviour on our platform. [Basically we have an] algorithm, which is self-evolving and self-improving. We start by giving people very small credit lines and see their behavior, and over time just keep increasing the credit line based on the behavior displayed on the platform.” In the absence of formal credit scores, the data of what each merchant does on Udaan is enough to procure timely funds to keep the business going.
Collapsing a fragmented supply chain in Vietnam
Telio’s founder, SyPhong Bui, was eager to help what he termed as ‘household businesses’ in his home country of Vietnam. “[We continually did] research about the daily lives of these small business owners, and found out that they have a lot of pain points,” says SyPhong.
Founded in 2018 by SyPhong Bui and My Linh, Telio connects small retailers with brands and wholesalers on a centralized B2B e-commerce platform that delivers more choice, better pricing and more efficient logistics.
According to SyPhong, Vietnam has more than 300,000 retailers selling fast-moving consumer goods all across the country. These homegrown, household retailers are known locally as cua hang, providing daily essentials and simple services to the neighbourhood. For many in Vietnam, they also act as a community gathering point - to watch a local sports game or have an afternoon chat with your neighbours.
But these small businesses also face perennial problems - pricing from suppliers isn’t always transparent, a variety of goods has to be sourced and managed from 50 to 80 different contact points, and lastly, no reliable delivery of goods, which affects inventory.
“With Telio, [these retailers] can easily find sources for their goods all in one place with flexible delivery and transparent pricing,” says SyPhong. “So instead of managing multiple contact points, multiple deliveries within a day, or different days in a week, they can now order from Telio and have delivery [all] in one shot.”
Empowering micro-entrepreneurs in Indonesia
In Indonesia, MSMEs make up around 99 per cent of existing business enterprises and employ more than 95 per cent of the total workforce across the country. Throwing their weight behind these small businesses and entrepreneurs is Tokopedia, an Indonesian technology company founded in 2009 by William Tanuwijaya and Leontinus Alpha Edison.
Ten years on, their hugely popular online marketplace continues to do well with gross merchandise value expected to triple to as much as $16 billion USD just last year. Now a unicorn, Jakarta-based Tokopedia has expanded from an online marketplace connecting buyers and sellers to becoming a “super ecosystem”, says William.
Tokopedia has been building and evolving their infrastructure to support services such as fulfillment logistics, payment and financial services. These efforts will empower some 7 million merchants who operate on the platform, of whom 86% are first-time entrepreneurs.
Ultimately, William sees Tokopedia’s success as a multiplier effect on the success of small businesses, affirming, “We can only be successful by helping others become successful.”
One example of this happening is through Tokopedia’s acquisition of the Indonesian wedding services marketplace Bridestory. Tapping on the tech company’s payment infrastructure, over 30,000 wedding vendors on Bridestory - many of whom are small enterprises or freelancers - were able to market their services and use Tokopedia’s multiple payment channels.
Ultimately, William sees Tokopedia’s success as a multiplier effect on the success of small businesses, affirming, “We can only be successful by helping others become successful.”
