Financial technologies that have boomed on the onset of the Covid-19 pandemic have made micro, small, and medium enterprises excel in the past two years.

Based on the latest study jointly developed by the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School and the Asian Development Bank Institute, the growth made by MSMEs in five ASEAN countries mainly was in terms of net profit, revenue, employment and performance.

The ASEAN Access to Digital Finance Study measures the impact of digital financial services on consumers and MSMEs in Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Based on 600 responses, the study aims to understand how individual households, consumers and MSMEs use digital financial services — such as online lending and capital-raising platforms — to access credit or raise funds from 2020 to 2021.

In the Philippines, the researchers tapped local fintech companies like First Circle, BillEase and Tala for more accessible data collection among its clients.

The study reveals that digital financial services contributed to advancing financial inclusion for individual consumers and business users.

MSMEs saw a positive impact after getting finance through one of these three digital financing models: person-to-person/marketplace business lending, invoice trading, and equity crowdfunding.

The top three positive impacts were productivity (65 percent), a more extensive customer base (41 percent), and launching a new product/service (39 percent).

Furthermore, MSMEs that borrowed from alternative financing sources defaulted less on their loans, with a default rate of 1 percent versus the three percent non-performing loan bank average in ASEAN countries.

Of the study respondents, 89 percent said they have never missed a loan payment and payments are ongoing; the rest were unable to repay on their due date but eventually repaid the total amount with some delay or temporarily missed a payment due to platform error but are currently updated on charges.

Before approaching fintech platforms, Philippine MSMEs sought funding from family and friends, banks and microfinance institutions.