This article showcases our top picks for the best South Korean based Financial Services companies. These startups and companies are taking a variety of approaches to innovating the Financial Services industry, but are all exceptional companies well worth a follow.
A lot of small and mid-sized companies have been in financial difficulties because of the continued COVID-19 spread. They visit banks to tackle the financial strain, but they face limited range of support because of the unstable income and lack of financial information. And supply chain finance has emerged as a solution to solve the problem.
Fin2B is a South Korean fintech startup offering SaaS-based FSCM (financial Supply Chain Management) solutions to SMEs in the South East Asia.
The company is credited for succeeding digital accounts receivable discount for the first time in Vietnam in 2019.
Fin2B's FSCM connects financial institutions to SMEs through efficient untact process platform which significantly reduced transaction coast of financial institutions while promptly proceeding businesses of SMEs through SaaS (Software as a Service).
Park Sang-soon, CEO of Fin2B, served as the financial chief of Boston Consulting Group Seoul before launching his own firm October 2015. From the very beginning, Park focused on huge potential of Southeast Asian market where B2B financial services were, and are, still lag behind. He mapped out his vision to grow Fin2B as No. 1 fintech specialist in Asia, and in 2018 set up his initial services in Vietnam for its important role among the ASEAN members.
This year, he is set to push his services forward in Indonesia while also making himself busy expanding FSCM to more applicable areas. He points out digitalized services in supply chain finance has become more important than ever especially in times of the Southeast Asian market getting bigger and significant.
Korean startup Fin2B (Finance To Business) is bringing in innovation in providing financial solutions for small and medium enterprises (SMEs) through their platform centering on the Supply Chain Finance (SCF) area. The account receivable trading platform of the startup allows SMEs to receive efficient short-term financing from institutional investors based on receivables issued by large enterprises. The Vice-President of Fin2B Duke Lee talked in depth with koreatechdesk.com about the company, the service and future of supply-chain finance.
1. Can you please tell me what is your startup about?
Fin2B is a startup where we provide finance to small and medium companies based on their partners’ credit, which could be a large company with a credit-worthy history. So, this is the investment and the motivation for the SMEs. The biggest problem for SMEs is to obtain efficient financing from first-tier financial institutions. So, if they don’t get finances from first-tier financial institutions, they must resort to secondary finance institutes such as savings banks and other financial companies which charge exorbitant rates in excess of 20% APR. We are trying to provide them closer to what their buyer is getting which is somewhere near 6% if the buyer is in the BBB range. So, in that way we can help SMEs get an efficient loan by allowing investors to utilize their relationship with credit-worthy buyers.
2. Can you talk about the vision of the company?
Fin2B’s vision is to create an efficient means for SMEs utilizing assets in supply chain such as account receivables. We envision that we continues to expand our presence in Asia beyond Korea and Vietnam where we are currently present which will allow us to do cross border financing based on account receivables..
3. What about the opportunity for such a product or service in the market? Do you see revenues growing?
Factoring allows SMEs to obtain efficient financing utilizing a creditworthy buyer. So there really is no reason not to use the service if offered. Because smaller supplier supplying to larger buyer is commonplace, the opportunity is huge. For instance in Korea, the total amount of account receivables held by SMEs today is about 240 billion USD. Among this, only about 10 billion USD is being addressed by the first-tier institutions for factoring only utilizing less than 5% of full potential.
We believe that we can unlock the potential by innovative solutions in factoring business with technology. We do have some immediate opportunities both Korea and Vietnam for growth and looking forward to expanding to other parts of Asia.
4. How does the actual business model work?
To explain our business model, it will be worthwhile to explain factoring first. When a supplier provides goods or services to the buyer, the supplier has the right to be paid by the buyer. This right is called account receivable. Factoring allows financier to take account receivable from a supplier and provide funds to the supplier directly. The financier will eventually be paid by the buyer. As financier depends on the buyer to be paid, financing fee depend on buyer’s credit not the supplier’s credit
Fin2B platform allows factoring service to happen efficiently by automatic authentication of account receivables, digitization of processes and connecting all parties via Internet-based platform. This allows cost reduction in operation and high scalability. We basically take a fee from the transaction on the platform.
5. How did you join the company, and can you talk about the founder’s background?
My first job after school was at a consulting company called BCG and Sangsoon Park, Fin2B’s founder, was my boss on my first project. We were doing a risk management project for KEB (Korea Exchange Bank). I developed a high respect for Sangsoon during my years in BCG which eventually led me to join Fin2B. I worked in Fin2B for two and a half years.
Sangsoon Park, the founder of Fin2B, had been the managing director and partner for BCG. During his 18 year tenure at BCG, he supported the advancement of Korean financial industry working with leading financial institutions in Korea. His reputation in the industry and business insight is the foundation for our company.
6. What is the unique strength of your company when compared to other finance companies in the market?
In Korea, we target market with buyer’s credit from BB to BBB range currently not being served by banks. Banks are serving only the highest creditworthy segment and tend to shy away from offering factoring service to the buyer with credit below BBB. Unable to access factoring service, SME suppliers in this segment are forced to resort to high-interest loan from 2nd tier financial institutions. We offer a competitive rate to suppliers in this segment by efficient financing platform.
In Vietnam, we work with various financial companies to address wider markets. As the factoring market is still at the developing stage, suppliers who have account receivables from creditworthy buyers may not be able to get financed based on account receivable. We work with banks and securities companies to address various segments of the market. We believe this is similar to some of other southeast Asian countries such as Indonesia.
7. What about your scalability strategy for the domestic and overseas market for your product and services?
Both in Korea and overseas, key part of our growth is partnerships. We make partnerships with financial institutions, insurance companies and service providers to large buyers. Partnership with financial companies also provides the necessary license for factoring which can be an issue in some part of South East Asia.
8. Can you talk about your funding history?
We have received about $2 million from strategic and financial investors.
9. What next milestone do you want to achieve for getting the next round of funding?
We are have recently opened our Platform for Mirae Asset in Vietnam. So, our next focus would be to make this project a success.
10. How will you be utilizing the new round investment?
The investment will be used to expand to different market segments in Korea and Vietnam and expansion to Indonesia.
An efficiently working finance solution is important for the growth of small and medium-sized enterprises (SMEs). Korean startup Fin2B (Finance To Business) is a FinTech company has been providing innovative financial solutions centering on Supply Chain Finance (SCF) area specifically to support small and medium enterprises (SMEs). Fin2B has created an account receivable trading platform where SMEs are able to receive efficient short-term financing from institutional investors to based on receivables issued by large enterprises.
Fast Payment via Account Receivable Trading Platform
Fin2B was started in 2015 with the primary goal to help expand access to finance for SMEs. The company has developed an innovative solution in B2B supply chain finance, which gives buyers an effective tool to manage their supply chain while providing their suppliers with efficient access to cash. The working mechanism of Fin2B’s account receivable trading platform is quite simple. The core technology of Fin2B allows it to identify and verify accurate information on accounts receivable linked to the ERP (enterprise resource planning) systems of buyers.
A system that works for buyers, sellers & the investors
Fin2B’s system provides efficient funding to sellers from both financiers and buyers. The process works as the buyer inspects and accepts goods supplied by the supplier, who then update their ERP with scheduled payment. This information is registered to Fin2B account receivable platform. The supplier can request early payment based on registered account receivables and expect to receive a payment within one business day. At maturity buyer payment to be transferred to financier account. For buyers with cash, buyers can make an early payment to their purchases at discounted costs.
This technology enables not only the sellers but also investors to obtain more accurate information on accounts receivable, thereby helping sellers borrow money. Fin2B has digitized processes such as the transfer of the receivables and the notification procedure so that the application process is completed within 5 minutes without a further requirement for additional documents. This enables funding at lowering transaction costs as well as quick payments within one business day of the request.
Aiming to be a leader in Supply-chain management in Asia
Fin2B’s finance supply chain management solution has been working full-fledged in Korea since 2017. The startup has expanded its services to SouthEast Asian markets as well in Vietnam and Indonesia. The startup has a good track record of receiving investments from prominent investors and generating intellectual properties. The FinTech company has received $ 2 million investments from 6 different institutions and has received 6 different awards for innovation in finance. Fin2B is aspiring to be a leader in the Finance Supply Chain Management market in Asia and has a strong founding team of members with experience in the finance industry. Fin2B is constantly working towards developing the business with the primary objective to help SMEs overcome obstacles in getting access to finance.
Fintech startup Fin2B on Thursday announced that it has opened an accounts receivable discount platform, serving as a supply chain finance solution, and is moving beyond the domestic market to enter the Asian market.
“Currently, our accounts receivable discount platform is in its pilot phase, working together with affiliates of large conglomerates in Korea,” said Fin2B’s CEO Park Sang-soon. “We are also planning to operate this platform in cooperation with Vietnamese companies in the second half of the year.”
Introduced in countries with well-developed financial markets about 10 years ago, supply chain finance is a set of advanced financial transaction solutions that utilize various business assets, such as accounts receivable, from business-to-business deals to raise corporate funds.
“Our accounts receivable discount platform leverages supply chain finance to provide a new solution for financing small and medium enterprises, which have been relatively underprivileged in terms of finance,” Park said.
The three executives of the startup, including CEO Park, are experts in economics, finance, and electronics engineering who once worked for Boston Consulting Group.
Sellers and SMEs that want to raise funds based on accounts receivable owed by buyers prior to the expiry of such accounts receivable often find it difficult to obtain funds from banks or non-banking financial companies, because only the buyer has information on the accounts receivable. Recognizing this difficulty, Fin2B has devised a way to provide funds by verifying the credibility of companies and determining the authenticity of the accounts receivable.
“Our core technology allows us to identify and verify accurate information on accounts receivable linked to the ERP (enterprise resource planning) systems of buyers. This technology enables not only the sellers but also investors to obtain more accurate information on accounts receivable, thereby helping sellers borrow money,” Park said.
A seller that intends to raise funds based on accounts receivable owed by a buyer applies for a discount and enters into a credit transfer contract through the platform. Fin2B then promptly verifies the information and prepays up to 80 percent of the credit amount on the day after the application was submitted. The balance is paid after deducting all costs and providing discounts of between 5 percent and 10 percent. Fin2B has digitized the entire process, from discount application, credit transfer, and issuance of credit transfer notification (to the buyer) to prepayment and balance payment.
Fin2B’s platform business model is based on platform usage fees and fund management income, and the company plans to expand its supply chain finance service areas to include settlements receivable and rental receivable in addition to accounts receivable.
In 2017, its first year of business, the company estimates sales of 200 million won ($180,000), which it expects to increase to 10 billion won by 2020.
“Fin2B will concentrate on realizing the globalization of financial services, which the Korean finance industry has not yet managed to achieve,“ Park said. “Our vision is to contribute to the future growth and success of SMEs and become Asia’s leading fintech company specializing in supply chain finance.”
The Gyeonggi Center for Creative Economy & Innovation supports the overseas marketing efforts of Fin2B.
