Reinventing financial services for SMEs: Validus

SME Banking
02/05/2023 Interview
profile picture of Vikas Nahata

Vikas Nahata

Validus Capital

Co-Founder & Executive Chairman

Based in Singapore, Validus offers a ‘business account that does it all’ in Southeast Asia. We interviewed Vikas Nahata, their Co-Founder and Executive Chairman.

In which countries do you operate and how do you perceive the banking offer to SMEs there? In your opinion, does the offer from existing financial institutions meet the needs of SMEs?

Validus operates in Singapore, Indonesia, Vietnam and Thailand, and each market is vastly different from the others and presents a unique set of challenges.

While traditional financial institutions in Singapore are at the top of the game when it comes to digital banking capabilities, their application processes, collateral requirements and turnaround times have not improved significantly. There is still a large segment of underserved SMEs who are unable to access financing from existing financial institutions, due to a lack of audited financials, business plan projections and collateral.

In Indonesia, Thailand and Vietnam, processes for SMEs to access credit continues to be time consuming, tedious and inefficient. Where available, the digital finance offering from existing financial institutions is still impeded by credit underwriting requirements that have not evolved, and existing players have struggled to balance the needs and credit characteristics of SMEs with the stringent criteria set out by local regulators.

It is not enough to rely on the SME to provide enough data for underwriting; in order to truly scale support for SMEs and drive financial inclusion, alternative methods of assessing creditworthiness are required, and credit scoring, underwriting and loan monitoring processes need to become more efficient.

The major established financial institutions maintain a strong foothold on the already banked segment of SMEs and thus have lesser incentive to crack the holy grail of using non-traditional data sources coupled with AI-driven automation to expand credit access and supplement underwriting of underserved segments.

As a fintech, Validus has the advantage of being agile and flexible without being hampered by outdated processes and clunky core legacy banking systems. This has enabled us to launch innovative alternative financing solutions for SMEs – including partnership-led supply chain finance solutions.

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