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Financial Services
SMBs driving growth for fintech solutions like expense management platforms
06 Jan 2025
Investment thesis
  • Large TAM & revenue pool:
    • SMB’s expense management related transactions are worth ~US$ 298B in SEA, and it is expected to grow with CAGR of 7% in next 5 years
    • Revenue pool for expense management / corporate card solution is primarily constituted by card transactions (interchange) and lending account; Revenue pool is expected to grow with CAGR of 9% in next 5 years
  • Scope of monetization: Current architecture platforms and overall payment systems enables these tools to earn via interchange, FX markup and interest income on float in merchant accounts 
  • Significant value proposition: 
    • Expense management / corporate card solution can deliver significant simplification in the workflow and reduction in TAT from expense / invoice submission, payout to reconciliation
      • Process with no support: TAT 7-30 days
      • Process with HRMS and ERP: TAT 2-7 days
      • Process with corporate cards / expense management system: TAT 1 day
    • ~44% of SMBs use excel spreadsheets to manage expenses and Google Forms for reimbursements; 52% of current users, especially businesses with 100-250 employees found their traditional ways of handling expenses time consuming
  • Significant gaps in current ERP offerings: Offerings of expense management solutions help bridge gaps in current enterprise solution providers such as international payments reimbursement handling, employee management, automatic data extraction, etc.
  • Adjacent opportunities: Expense management / corporate card solution could eventually morph into neo-banks themselves as they expand their offerings to their customers
  • Target differentiation: Users find Target’s onboarding process and account activation better than the competitors; Where peers had better portal / app interface, customer service and value-added services
  • Low regulatory risk: Current regulations pose no risk to the business model, furthermore, digital banking licenses are available as these players expand their product suite










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