The Bank of Tokyo-Mitsubishi (BTMU) has entered a partnership with a fintech company to help improve its financing offering in Southeast Asia.
The agreement with iAPPS, a mobile app platform, will help the bank improve its cross-border funding and money transfers, targeting agricultural, manufacturing and retail supply chains.
“We are looking at cross-border money transfer and finance as one of the initial initiatives. One of the areas we are planning on is a pilot for crowdfunded microfinance for the supply chain involving the ecosystem of traders and smallholders,” Shue Heng Yip, head of digital transformation for Asia and Oceania at BTMU’s parent group, MUFG, tells GTR.
“We are also looking at enabling sustainable farming practices and market reach for developing areas in Asean,” he adds.
It had been hoped that improvements in technology would lead to a narrowing in the trade finance gap in regions that are traditionally underbanked, such as Southeast Asia. However, in its annual trade finance survey last year, the Asian Development Bank (ADB) found that the benefits of trade-based fintech had yet to trickle down to developing Asia.
Respondents believed that trade digitisation could help mobilise micro SME (MSME) financing, but that the market gap has yet to be reduced. “More than reducing cost, fintech needs to deliver an enhanced capability for financial institutions to conduct due diligence on MSMEs before it can play a role in reducing gaps,” said the ADB’s head of trade finance, Steven Beck, on the release of the report.
In Southeast Asia, part of MUFG’s digital strategy is to use technology to help narrow the barriers to entry in the small business borrowing market.
“We recognise the potential of new technologies, especially in the financial sector, and the importance of harnessing them for our strategic business efforts. We are constantly exploring innovative ideas that can help our clients find alternative and more effective solutions to their banking needs,” says Hirofumi Aihara, general manager of digital transformation at MUFG.
iAPPS has previously worked to offer financial services to underbanked overseas migrants around Asia. Part of its offering is an e-wallet platform, while it also launched a mobile app that allows the booking of sporting facilities in Singapore, which has accrued 1 million users in two years.
“We are looking forward to the many collaborative opportunities that this strategic alliance will bring. I am confident that this alliance will strengthen our capabilities to provide excellent fintech services to the Southeast Asian region and beyond,” says the company’s CEO Lilian Koh.