Demystifying the SME loans operator, Ant Group’s MYbank
What is MYbank and how does it work?
MY is short for mayi, which in the Chinese language means Ant. In English, MYbank’s name gives a sense of ownership and empowerment to its small business borrowers — it’s theirs. Its other oft-used Chinese name is wang shang yin hang, meaning “online merchant’s bank”.
In fact, MYbank’s vision has always been one of inclusion, which means the owner of a tiny mom & pop shop can enjoy the same quality of financial services as the president of a big bank.
Since launching in 2015, MYbank has served 29 million small and micro enterprises, and recently announced a plan for the next 5 years to support 10 million more SMEs and 40 million female business owners, through supply chain financing and rural lending.
On top of this, MYbank has been called China’s “first digital bank” dedicated to bringing inclusive financial services to small and micro-enterprises, with a key focus on supporting women’s empowerment. Here’s why.
MYbank’s Theory of Change
To help overcome the challenges women face in accessing financing opportunities and reducing the digital gap, MYbank has developed a “3D” approach to support women entrepreneurs: namely, “Digital Financing, Digital Skills and Digital Community.”
The combination of these three key components in the digital era play a unique role in scaling up women’s equitable and inclusive development in China and beyond.
The problem: According to the International Finance Corporation (an arm of the World Bank Group), women entrepreneurs in emerging markets face a daunting gender finance gap when it comes to growing their start-ups, as they continue to face unequal access to capital.
The solution: MYbank as a technology-driven digital bank, delivers tech-enabled inclusive financial services in an efficient and replicable way. MYbank’s data-driven approach uses more than 3,000 variables to assess an applicant’s ability. This allows a quick and cost-effective assessment of sales of small businesses and their repayment patterns, enabling the “3–1–0” lending model: borrowers can complete their online loan applications in 3 minutes, obtain approval in 1 second, with 0 manual intervention.
What we have found: Among all the women-owned SMEs served, about 80% of customers received their first-ever loan from MYbank, indicating that MYbank’s digital lending model enabled it to reach out to the unbanked and underserved clients. Most notably, MYbank’s has found that women-operated SMEs have a lower default risk (23%) compared to SMEs owned by men.
Digital Finance, Digital Skills, Digital Community
Digital finance: Since its establishment, MYBank has provided financing to more than 8.2 million women-operated SMEs in China, with an average loan amount of $5,700 and a default rate of about 1.5 percent, which is 60% lower than the industry average. As a gender-balanced cloud-based bank, over 50% of MYBank’s loan recipients are women entrepreneurs.
Case Study 1: Thanks to a loan from MYbank, Qiu Mengyi’s nail saloon business survived and she’s now looking to the future. Qiu was the first small business owner in Wuhan city to apply for MYBank’s interest-free loans aimed at helping hard-hit SMEs get back on track. With a few clicks on her smart phone, she applied for a loan of RMB 52,000 (or around USD 7,000), and was approved. The entire process took about 15 seconds.
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Digital skills: In addition to the much-needed financing support, MYbank has helped women entrepreneurs digitize their operations and embrace the digital dividend, to build their financial literacy and digital operation skills. For example, MYbank has provided digital trainings for women entrepreneurs in emerging markets such as Indonesia.
Case Study 2: Utari Octavianty, a co-founder of Aruna, an Indonesian fishery company, in 2019 won the Alipay-NUS hackathon, and was selected to participate in the Alipay 10x1000 Tech for Inclusion training program in Hangzhou, where she learned from the Head of Rural Finance at MYbank. The week’s deep dive helped her gain a broader vision of using technology to drive business growth. After she returned to Indonesia, she upgraded her company’s tech capacity, and successfully grew her business. She was featured in Forbes’ “30 Under 30 Asia 2020” in April 2020.
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SMEs are the key pillars of every economy. Yet in many countries, it has been difficult for women entrepreneurs to communicate and learn from each other. To this end, MYbank has built a comprehensive digital communication community called “business engine” that is housed in the Alipay app. The community provides an open, safe and interactive place for 40 million SMEs in China, including 19 million women entrepreneurs. to learn from each other.
The initiative was upgraded in May 2020 into a dedicated “Mulan Community” for women entrepreneurs. The Mulan Community covers three main areas: a hotline for business advice, a virtual “Mulan University” that offers 100+ financial and tech courses, and an online chatroom for women to exchange business ideas.
Women entrepreneurs told us they felt empowered as they found career mentors, tech leaders and friends who share the same vision and challenges. Some also said that just finding like-minded friends to discuss life and social issues after work made them feel connected and refreshed.
Case Study 3: Fan Yang, a female vegetable vendor selling vegetables in Hangzhou, published her own entrepreneurial story of using her QR code payment track record to start her first loan with MYbank, received tens of thousands of “likes” in the online community. Her business growth journey as well as her resilience and optimism inspired many people. She was elected to the 2019 Global Women Entrepreneurs Conference held by Alibaba Group, representing those passionate entrepreneurs who wish to make a difference.
What’s next for MY?
There is an African proverb that says: “If you want to go fast, go alone. If you want to go far, go together”.
With this belief, MYbank has been working closely with incumbent financial institutions to scale up the development impact.
It also aims to transfer its digital lending methodology to other emerging markets so that more women entrepreneurs can benefit from its innovative model.