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Using Digital Solutions to address the Access-to-Finance Gap


To date, availing access-to-finance has remained a challenge for many SME/MSMEs in Bangladesh. An estimated number of 12 million entities identify as SMEs and MSMEs and they are currently facing a void when it comes to availing business loans. Neither the traditional banks/financial institutions (FIs), nor any other types of financial organizations (like MFS Operators) – are serving the needs of this segment. Why is this happening? From the perspective of Banks and FIs, it is not cost-effective for them to go into the SME/MSME segment. They will need a large field force to serve this segment. On the other hand, it is also very tough for the SMS/MSMEs to meet the conventional conditions of a bank/FI. In the MSME segment, there is lack of identification and proper documentation. Also, they lack access to quality financial products at right prices and charges. More often than not, they lack the collateral requirements of an institutional lender. There is also a fear about the fees and charges deducted by banks, and income tax. So, they (SME/MSME) are also reluctant to approach traditional banks for their financing needs.


We all know and acknowledge this long standing ‘gap’ in the market. Recently, some initiatives have been taken to use digital services to bridge this gap. One such notable initiative has been taken by KIU Bangladesh Ltd (a Fintech), in the Southern (Khulna) Region of Bangladesh.


The Project

In the first phase of this program, Kiu identified 1200+ small businessmen and fish farmers, traders, and retailers of Khulna Division as eligible clientele for Kiu’s App Based Solution – “Kiu The Bookkeeper”. Then, 600 most potential businesses have been shortlisted among them, and have been trained on the use of “Kiu The Bookkeeper” App. They have been briefed thoroughly (through day-long workshops) about usage of the App, and the potential to get working capital loans at a reasonable rate of interest. The response was very positive, and participants were elated about the possibility of getting loans via app. They were excited about it primarily for two reasons:

  • They (the target segment) have a fear about the process and charges relating to the formal banking channel. Paperwork is a nightmare to them. Also, they have a conception that banks deduct money from their accounts without telling them (this is a result of automatic deduction of bank’s annual fees/charges, govt. taxes, etc.). They hope that using an app-based system will free them up from extensive paperwork requirements. Also, a ‘digital solution’ will be transparent and fast, and it will not deduct their money automatically

  • Apart from Banks, the only other option these fish farmers / traders / retailers have is the “informal lenders”. But informal lenders charge exorbitant interest rates, and sometimes all profit from business is spent just to meet the strict installment payment routine of these informal lenders. The target segment hopes that the digital loans will provide them with another option (beside the banks) to get loans at a reasonable rate.

One encouraging fact noticed from this initiative is the large turnout/participation from women entrepreneurs in the learning workshops. More than 40% of the interested participants are females, and in some cases, they showed a better learning aptitude from their male counterparts.


After the training, the fish farmers/traders/retailers started to use the solution enthusiastically. They are being continuously assisted and guided by the on-ground field force. Some of the users have already applied for loans, and approximately 125+ SME/MSMEs have already successfully availed loans through the Kiu Bookkeeper App. The number is still small but the significance is high – as it has been conceptually proven that loan disbursement through digital platforms can work in Bangladesh.


So far, Kiu has facilitated loans to 25,000 SMEs and MSMEs in multiple countries in East Asia. Though Kiu has started small in Bangladesh (in one region only, with a selected group of people), it has the potential to grow and become an effective channel for facilitating business loans to SME/MSMEs, who face difficulty in getting loans from formal channels; and are extorted by the informal lending channels. The “Kiu model” can go a long way in overcoming these barriers for small businesses and giving them a much-required boost for a post-pandemic business growth.


Awareness and Onboarding Workshop in Khulna, Bangladesh



The Solution

Kiu is based in Vietnam. In ancient Chinese, the word “KIU” means “Bridge”. KIU’s mission as an organization is also to do that – creating a digital bridge between SME/MSMEs; and banks/financial institutions (FIs). And how are they doing it? Let us take a brief look at it.


Kiu starts by offering its customers simple and easy to use business management software, both on computer and on mobile (app-based). Kiu’s clientele (SMEs and MSMEs) keep their accounting records on these platforms. Based on the business transactions, Kiu platform performs an automatic credit rating analysis in the back end, and a credit rating score is generated for its clients. Then, using the credit rating score, clients can apply for loans to banks and financial institutions (FIs) affiliated with Kiu; and based on their eligibility, banks/FIs then disburse loans to the users. This whole process is done digitally, starting from business record keeping, credit scoring, and generation of loan applications.


Kiu has been operating in multiple countries of East Asia, namely – Vietnam, Cambodia, Philippines, Myanmar, and Thailand. A total of 92 Million USD loans have been distributed in these countries, among 10s of Thousands of users, using the Kiu Systems. And now, Kiu has started piloting this program in Bangladesh as well, in conjunction with USAID and WorldFish Bangladesh. The program is jointly funded by Kiu and WorldFish Bangladesh; while local implementation support is provided by two NGOs/MFIs: Khulna Mukti Seba Sangstha (KMSS) and Sanirvar Somajkollyan Sangstha (Sanirvar).



Join the program! Download Kiu's The Bookkeeper app today available on Google Playstore and the App store.




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