Key Takeaways
- E-commerce has fundamentally changed the way both consumers and businesses shop, with global B2B and B2C e-commerce Gross Merchandise Value (“GMV”) reaching a staggering USD 13.2 trillion in 2025. Capitalising on numerous structural growth tailwinds, the industry has seen the rise of a plethora of third-party e-commerce merchants, numbering over 31 million in 2025 and accounting for the lion’s share of global e-commerce GMV, with an especially outsized GMV contribution in Asia.
- Compared to traditional retail, e-commerce platforms generate rich, standardised, and contextualised data by capturing both fund flows and fulfilment, materially enhancing underwriting potential. In principle, while this should improve access to bank credit for e-commerce sellers, most banks remain structurally disconnected from the e-commerce ecosystem and lack access to real-time financial and operational data. This separation limits visibility into merchant performance and creates several key challenges, including (1) inaccurate credit profiling, (2) incompatible product offerings, and (3) an inability to control platform funds. Coupled with persistent operational frictions and prohibitive onboarding costs, most banks, especially in Asia, have remained on the sidelines, resulting in an estimated APAC e-commerce credit gap of USD 1.2 trillion in 2025.
- Recognising this whitespace, various FinTech lenders have emerged over the past decade to address a lending opportunity that has been left largely unaddressed by incumbent banks. While a growing number of incumbent banks are providing warehouse financing facilities to these FinTechs, this indirect participation model has seen them surrender ~USD 100 billion in annual revenue potential to frenemies. Most critically, in the process of funding their digital-native challengers, they have given up owning the client relationship.
- We see a clear opportunity for traditional banks and financial institutions to insert themselves more directly into the e-commerce merchant financing landscape, namely via co-lending (i.e., lending alongside specialist e-commerce FinTech lenders) and direct lending (i.e., lending directly to e-commerce merchants).
- With rapid advancements in technology, including artificial intelligence (“A.I.”), enabling robust alternative credit scoring and scalable, automated onboarding, we believe that a shift towards a more direct lending model is not only economically attractive for banks but one that is now operationally feasible, especially considering banks’ ability to leverage formidable competitive moats, including lower funding costs, vast balance sheets, regulatory licences, and established brand recognition.
