4 Reasons Banks Keep Losing E-Commerce Merchant Financing to Fintechs

§ 01 Executive Snapshot

• What: Banks are losing e-commerce merchant financing opportunities to fintech companies.
• Who: Traditional banks, fintech lenders, e-commerce platforms.
• Why it matters: The shift highlights a significant credit gap of $1.2 trillion in APAC e-commerce due to banks' outdated practices.

§ 02 Key Developments

• E-commerce platforms generated US$13.2 trillion in B2B and B2C gross merchandise value (GMV) in 2025.
• A recent report indicates an e-commerce credit gap of US$1.2 trillion in APAC by 2025.
• Only 23% of ASEAN SME merchants have received support from traditional banks.

§ 03 Strategic Context

• Traditional banks have relied on historical data for SME loans, which does not align with the dynamic nature of e-commerce cash flows.
• Fintech lenders have emerged to fill the gaps left by banks, leveraging real-time data for better credit profiling and risk assessment.

§ 04 Strategic Implications

• Banks risk losing significant market share in e-commerce financing if they do not adapt their lending models to fit the needs of e-commerce merchants.
• Long-term, banks may need to adopt co-lending or direct lending models to maintain competitiveness in the evolving financial landscape.

§ 05 Risks & Constraints

• Operational friction and high onboarding costs associated with manual KYC processes hinder banks' ability to effectively serve e-commerce SMEs.
• The reliance on traditional lending models may leave banks vulnerable to fintech competition that offers more tailored solutions.

§ 06 Watchlist / Forward Signals

• Observing how banks choose between warehouse financing, co-lending, or direct lending will signal their commitment to the e-commerce sector.
• Future developments in regulatory frameworks affecting e-commerce lending could impact banks' operational strategies and market positioning.