B2B Payments

APAC’s Unique (And Not-So-Unique) Challenges To SME FinTech


The image of SME finance services varies greatly across the globe. So when large financial conglomerates ramp up operations in a single region, like Mastercard has recently done across Asia-Pacific (APAC), their approach will probably look a bit different than it would in another part of the world.

Mastercard’s latest B2B initiative in APAC is to team with Maestrano, an Australia-based cloud platform designed for smaller companies to help integrate all of their cloud and non-cloud applications. The partnership sees Mastercard linking banks that issue its cards to Maestrano solutions that the banks can provide to their own small business customers. Stéphane Ibos, cofounder and CEO of Maestrano, told PYMNTS that the particulars of SME banking in APAC must be kept in mind. But, as he explained, there are characteristics of the local SME FinServ market that look pretty familiar to those of the U.S., Europe and elsewhere.

For instance, the collaboration between Mastercard and Maestrano leverages a financial institution to help an SME adopt cloud technology. As in many markets, the bank is typically the most trusted financial service provider an APAC small business has, Ibos said.

“Banks are generally seen as secure because of the regulations they are subject to,” he said. “This helps a lot with the negative perception that can be associated with the cloud.”

That negative perception often relates to the security of cloud technology and that data stored within it. And while banks provide a stamp of approval, so to speak, on the third-party cloud technologies they offer, Ibos also noted that working with banks makes it easier to reach more small businesses, rather than try to reach each one directly.

“Banks have a relationship and an engagement with SMEs,” he said. “It is not always the best, and can be dissatisfactory for both sides, but it does exist. They key idea here is to leverage this basis and make it a mutually fruitful relationship.”

For the banks, that means the ability to drive “better engagement,” the executive said, by providing better solutions. For SMEs, those solutions turn the bank into a trusted advisor.

That dissatisfaction by banks and SMEs alike, however, can be a challenge. Across many parts of the world, small business banking is a thorn in the side of FinServ. Banks struggle to address the particular needs of small businesses, often thrown somewhere between consumer and corporate, but rarely addressing unique needs directly because SMEs are quite unprofitable.

Ibos said banks across APAC have this same concern.

“I definitely think they want to [adequately meet SMEs’ needs],” he said. “Whether they are there or not is a different story. But we definitely see an appetite in the banks to provide better, more suitable services to their SME clients.”

Among their top challenges, he continued, is that banks don’t fully understand the small business. Because it’s not financially viable to reach out to each SME directly, filling in the knowledge gaps within the FI is tough, too. As APAC banks work to do that, Ibos said he sees a pattern in the region also seen in other markets: FinTech collaboration.

“Right now, banks are a commodity to SMEs. The FinTech wave is threatening their supremacy,” he stated. “But we are betting on the fact that a lot (if not all) of them are looking into innovation and working closely with the FinTech industry.”

But the Asia-Pacific region does have its own hurdles not shared by peers overseas.

Ibos pointed to the uniquely vast SME community, for one.

“Whilst some countries will be quite advanced in terms of cloud and related technologies, like Singapore, Australia or New Zealand, for instance — they are leaders in cloud — others are still a bit further behind, especially in Southeast Asia,” he said. “This creates a problem for cloud providers that are not necessarily able to benefit from economies of scale and hence provide a pricing that is not palatable to those in less mature markets.”

For FinTechs, there is another hurdle: While some SMEs in APAC are well-versed in cloud technology, others aren’t even using technologies like spreadsheets, considered outdated by standards in other parts of the world.

“This, again, shrinks the addressable market,” said Ibos. “Some local cloud offerings exist, but they usually do not compare too well with the standards of cloud offerings outside Southeast Asia and, again, generate more dissatisfaction than positive results.”

Some parts of Asia-Pacific are simply too distrusting of cloud technology to take the it on, he added.

This is where the traditional FIs come in. Whether it’s a small business in Thailand using cloud technology for the first time or an SME in the U.K. exploring which cloud service provider to choose, both companies are likely to turn to their banks for trusted insight in how to proceed. According to Ibos, this collaboration between FinTech and bank transforms the relationship.

“Banks can (and will) become advisors and supporters [to SMEs],” he said, “rather than just a commodity.”


Featured PYMNTS Study: 

With eyes on lowering costs to improving cash flow, 85 percent of U.S. firms plan to make real-time payments integral to their operations within three years. However, some firms still feel technical barriers stand in the way. In the January 2020 Making Real-Time Payments A Reality Study, PYMNTS surveyed more than 500 financial executives to examine what it will take to channel RTP interest into real-world adoption. Here’s what we learned.

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