MatchMove takes stake in P2P lending platform MoolahSense

Singapore

DIGITAL payments startup MatchMove looks to boost its SME lending capabilities in the region by acquiring a stake in Singapore peer-to-peer (P2P) lending platform MoolahSense, said MatchMove group chief executive Shailesh Naik in an interview with The Business Times on Thursday.

The Singapore-based fintech has bought up to 20 per cent in MoolahSense, and plans to raise that to a majority stake over the next 12 months.

The deal comes amid the rising attention to Singapore fintechs as the Republic opened up applications for new digital banks.

Analysts say this may stir up a budding trend of consolidation in fintech services such as payments, lending and remittances, as more home-grown startups look to scale and capture growth overseas.

While MatchMove declined to disclose the transaction price, Mr Naik told BT the "multi-million dollar" deal will enable the firm to tap on MoolahSense's tech platform, using its credit evaluation and capital distribution methods to offer in-house financing solutions to MatchMove's pool of regional SME clients.

On the lending front, MatchMove currently acts as a "pass-through channel", so lenders use the platform to automate disbursement and provide customers faster and easier access to capital.

By buying a stake in MoolahSense, MatchMove can now hook up lenders and borrowers from its own client ecosystem, said Mr Naik.

"It only makes sense for both (firms) to combine. Rather than trying to build it ourselves, we can tap on MoolahSense's unique IP and strong branding in the market to facilitate the lending in-house," he added.

As it is, MatchMove operates a digital wallet that allows businesses to make online and offline payments via prepaid cards issued instantly.

Other services include P2P domestic transfers and cross-border remittances via the digital wallet.

But access to credit remains a key challenge for SMEs across the region to achieve scale and optimisation, said Mr Naik, citing the lack of credit and funding options from bigger lenders, such as banks, as the main reason.

"We want to be the go-to combination for SME lending in the region," he noted.

Calling the acquisition a strategic move, MoolahSense's chief executive Lawrence Yong told BT that MoolahSense completes the "third leg" of MatchMove's suite of capabilities.

"They're really strong in the payments area, after years of doing 'spend and send' services. But in terms of lending, they need quality data," said Mr Yong.

"We help them to make sense of such data and translate them into sound business decisions."

In return, MoolahSense can tap MatchMove's client base to expand its regional footprint. India is one of MatchMove's largest markets. Within South-east Asia, the firm also has a presence in Singapore, Indonesia, Vietnam and the Philippines.

Some of its larger clients have their own connections with other SMEs, and it is this extended network that MoolahSense has its eye on.

"These big companies do business with the smaller SMEs in their own community... these are companies we want to serve," said Mr Yong.

"MatchMove has good traction with a lot of corporate customers and these are useful relationships for us."

Both firms are also open to tie up with other fintech players to expand their digital offerings.

"Nobody can build the mother of all applications and solutions alone," said Mr Yong.

This comes on the back of fierce competition from MoolahSense's peers in Singapore. Having built up a regional loan portfolio worth about S$80 million since its inception, MoolahSense is now one of the smaller players in the P2P scene.

Validus Capital's total loan portfolio to date amounts to around S$287 million, while that of Funding Societies stands at S$838 million.

Validus, which is planning to apply for a digital banking licence in Singapore, is likely to enter a consortium with other partners to do so, its executive chairman and co-founder Vikas Nahata told BT.

In KPMG's fintech predictions for 2019, the consultancy noted that it expects to see increasing levels of consolidation as startups look to scale and fuel international growth.

Chia Tek Yee, head of financial advisory at KPMG Singapore, told BT that he expects consolidation to continue.

"It is the rise of the 'platforms' that has resulted in players like Grab and Gojek making acquisitions, not so much for scale, but for plugging gaps in offerings in countries that they expand to," he said. "You will see players who have payment capabilities acquire those with lending abilities, and vice versa, to flesh out their overall platform."