The three partners will collaborate on payment solutions aimed at addressing the under-served micro, small and medium enterprise (MSME) lending market. Singapore-headquartered fintech Lightnet Group has signed a memorandum of understanding with decentralized credit and settlement network Velo Labs and Visa to expand lending to the MSME market in Asia, according to a press statement on Monday.
This initiative aims to enable users with poor or inexistent credit histories to receive a line of credit by depositing digital assets as collateral, with Velo tokens serving as the digital asset collateralizing financial solutions. This approach is suited to connect over 1 billion unbanked and underbanked individuals in APAC to the global financial system, Lightnet and Velo Labs said.
Working closely together, the collaboration will also facilitate near-real-time global transactions between participating banks, money transfer operators and other financial service providers.
The announcement cited the large opportunity for the MSME lending market, noting that $5.2 trillion in MSME lending goes unserved annually, with more than half of this financing gap existing in the Asia-Pacific (APAC) region.
Being new-to-credit or lacking creditworthiness is often an obstacle to achieving one’s financial goals, such as securing loans to start a business or even buying a car…We are providing customers from the MSME market with another pathway to build credit and improve financial wellness, Tridbodi Arunanondchai, vice chairman and group CEO of Lightnet Group, said.
Lightnet was co-founded in 2018 by Chatchaval Jiaravanon – a family member of the Charoen Pokphand group in Thailand – and tech entrepreneur and former investment banker Tridbodi Arunanondchai. Earlier this year, the startup raised $31.2 million in a series A funding round led by UOB Venture Management, the private equity unit of UOB Bank. It recently partnered Swiss crypto bank Seba to offer remittance services for migrant workers in Asia.