Alright, so we probably need some re-introduction to this wholesale digital bank, Green Link Digital Bank (GLDB). Unlike the other digital banks spun off from well-known digital giants like ANEXT Bank from ANT Group, Maribank from SEA Limited, and GXS from Grab and Singtel, GLDB is owned by Chinese Developer Greenland Group and HK supply chain financing platform Linklogis.
Placed in the same licensed class as ANEXT, GLDB has a wholesale banking license that allows them to bank with micro, small, and medium-sized enterprises (MSMEs) and non-retail clients. So, what makes them different from ANEXT and traditional banks?
Here’s a unique situation since digital banks are primarily built to help smaller MSMEs by providing them with better access to financial services at an affordable rate. This is achieved through better efficiencies by operating digitally. Therefore, GLDB’s strategy to target already bankable clients is quite different from its competitors. One of the ways it does this is by removing the hard segmentation that traditional banks use to evaluate their clients. While segmenting clients is a good way to streamline bank resources, it also silos companies into buckets instead of acknowledging that businesses are diverse and should be measured based on needs rather than revenue size.
The way traditional banks classify clients is as follows:
Therefore, Greenlink bank does not limit its banking products based on revenue size but rather on a product-need basis. This means that if a small revenue customer has a high-volume telegraphic transfer requirement, the company will be able to access that solution. Vice versa, if a larger commercial banking customer is only looking for a small loan, they can be placed on a program lending instead of going through the long, tedious process for their larger segment.
Best of all, there is no longer a problem with hard segmentation that traditional banks deal with. This happens when a customer is a dollar above or under the revenue requirement for a banking segment and is denied product availability because of that.
One small caveat we find disappointing is its loan product, which has a minimum revenue requirement of S$1 million, a far cry from ANEXT, which even supports clients with revenue as low as S$100,000.
Another interesting product offering that GLDB has is its supply chain financing program. This is an interesting play as they offer financing to suppliers of clients that are of smaller sizes. This includes customers who are within the S$50 – S$100 million in turnover range. Typically, the program offered by major banks is only available to large corporates with at least S$500 million in turnover. But GLDB, with its expertise in Linklogis, can work with a smaller program size to enable commercial-sized clients to grant credit to their suppliers. And in today’s volatile supply chain environment, access to funding is key to prevent supply chain disruptions and ensure price stability.
Again, another small caveat is that GLDB offers this program with recourse to the supplier, which means that the supplier is still liable for the financing but aided with the commercial client’s financial standing. While it helps the suppliers, the loan will still be on the supplier’s balance sheet, which might add to their gearing ratio.
Unlike its competitor ANEXT, which focuses on its simple 2 products revolving credit and term loan, GLDB offers trade facilities to provide better structure to their loan products. The two trade facilities are:
For standard loan products, they have both overdrafts where you pay interest only on the amount you use and an unsecured term loan that goes up to a maximum of 2 years. They also offer a Micro Term loan, which is unsecured with amounts up to S$300,000.
Here’s the most important question on how they are doing things differently digitally. We rate them on two fronts:
All in all, more competition is always good for the industry, and GLDB definitely has its value add to the SME community despite some "less digital features". Nonetheless, it has only been less than a year since they launched, which is already something to be lauded given that GXS and Maribank are still behind their launch. This will probably not be the last we hear of GLDB, and we're sure there will be nimble changes made along the way.
We at Lendingpot are excited about GLDB’s new product launch and greatly anticipate the impact that they can bring to the SME community. At the same time, we look forward to other digital banks to see what exciting new developments they can also bring to the table. Want to find out more about the available financing options for SMEs? Arrange a chat with us, and we will be happy to help.
Benjamin heads up Lendingpot with a background in all things SME. He was previously a commercial banker at Citi with experience in Relationship management, Credit Risk, Trade Operations and Corporate FX sales; and understands the difficulties SMEs face in this opaque world of SME financing.