Asia's Credit Gap Is a Visibility Problem

Why a US$5.7 trillion lending gap is often a problem of seeing borrowers clearly

A Bangkok moneylender, quoted in a 2014 news report, said business was great. She charged 10% a month and found plenty of takers. Customers paid that price for a simple reason: the banks had already said no.

That story repeats across Asia. The IFC and World Bank's March 2025 update puts the MSME finance gap across 119 emerging markets at about US$5.7 trillion, or 19% of GDP, with informal enterprises adding another US$2.1 trillion in unmet demand. Between 2015 and 2019 the gap grew by more than 6% a year, even as the supply of credit grew 7%. Lending is expanding, but demand is expanding faster. The gap is also a development problem. The UN SDGs include an explicit target on small enterprises’ access to affordable credit, so here the public goal and the commercial opportunity overlap.

The usual explanation is that these borrowers are too risky. We think the more common problem is that they are too hard to see. UN ESCAP lists collateral requirements, due-diligence and KYC hurdles, and weak record-keeping among the main barriers. A lender with no data on a borrower prices that blank as risk. A lender that can see the borrower may price it very differently.

Research points the same way. A study in Management Science looked at a US fintech that used alternative data in underwriting. It approved 15% to 30% of low-score applicants that traditional models rejected, at lower rates, and the gains went to "invisible primes": thin-file borrowers with low default risk. If that holds in Asia, "underserved" often means "mispriced." The evidence is consistent with that idea rather than proof of it, and we try to treat it that way.

What seeing looks like

There is more than one way to see a borrower. In Thailand, ABACUS digital, the analytics company spun out of Siam Commercial Bank, uses data to underwrite people the bureaus miss: workers, freelancers and micro-entrepreneurs who are often shut out of formal credit. Its MoneyThunder app has disbursed more than US$744 million to 4.5 million users over five years, with approvals in as little as two minutes. The company reports that more than 30% of its MoneyThunder borrowers had been rejected by formal lenders, that over one-third had struggled with informal debt, and that half reported higher incomes within a year of taking a loan. Its non-performing loan ratio, it says, is roughly half the market average. These figures are company-reported, but the combination is the point: a book built on bank rejects that performs better than the market. Investors have taken notice. Its first bond, sold to institutional and high-net-worth investors, was oversubscribed.

In rural Uttar Pradesh and Bihar, Metafin lends for solar systems that replace diesel, and uses real-time energy data from the systems it finances to manage risk. By April 2025 it had financed more than 3,500 projects across 2,500 villages. Here the asset itself tells the lender whether the borrower can repay, and the loan cuts the borrower's reliance on diesel at the same time. Inclusion and climate can be the same transaction.

Scale is the test

Seeing a borrower clearly is one thing. Staying disciplined as the book grows is another. Kissht, which offers instant consumer credit online and at the point of sale, listed on the BSE and NSE in May 2026 and had served 12.25 million customers by June 2026. It also shows what scale does to the numbers. FY25 revenue fell about 20% as disbursements slowed, and gross non-performing assets (NPAs) reached 2.9% in December 2025 from 0.05% in FY23. Growth then resumed: total income rose 63% to ₹2,209 crore (US$232 million) in FY26, and assets under management reached ₹8,001 crore (US$846 million) by June 2026, up 61% on a year earlier. Gross NPAs were 2.25% at that point. That is what a lending business looks like as it grows, and it is the number we would watch hardest.

Why the rules matter

Credit can harm as well as help, and the difference is largely regulation. Thailand caps unsecured personal loans at 25% a year, against the 10% a month in the opening story. Caps have a cost: they can push the riskiest borrowers back to informal lenders. The bet behind them is that better data lets a lender price within the cap for more people than a bank would.

Indonesia shows the other outcome. Its regulator shut down 1,556 illegal online lenders in the first seven months of 2025 alone, while licensed platforms' 90-day default rate stood at 2.85% in June. India's RBI digital lending directions of 2025 require a key facts statement and clear APR disclosure before disbursal, plus a cooling-off period of at least one day.

Rules can also create markets. Wint Wealth, an online bond platform that lets retail investors buy corporate bonds once reserved for institutions, operates under SEBI's 2023 framework for online bond platforms. It says it has facilitated over ₹8,000 crore (US$860 million) of investments for around 300,000 investors, with zero defaults to date, while cautioning that this guarantees nothing about the future. Its CEO credits SEBI's clearer rules as a major reason the market has grown.

Kiwi is a second example. In 2022 the RBI and NPCI allowed RuPay credit cards to run on UPI, which has over 350 million unique users, eight to ten times the number of credit card holders. Kiwi, which issues such cards in partnership with Axis Bank, builds on that opening. It is early, and it has no loan-book record to point to yet.

The companies above built inside the rules, and their licences are part of their moat. Unregulated lenders can grow faster for a while. The ones that last tend to be the ones a regulator can inspect.

The Vertex view

Our funds came to this area over several years and in several markets. Vertex Ventures Southeast Asia & India backed ABACUS digital from Series A, led Metafin's Series A in April 2025, and led Wint Wealth's ₹250 crore (US$28 million) Series B in January 2026. Kissht came later: Vertex Ventures Southeast Asia & India first invested at the Series C in 2018, and Vertex Growth followed in later rounds.

None of these began as a financial inclusion bet. What they share is something we look for everywhere: places where the market's price of risk looks wrong. Three things have tended to separate the winners: a genuine data advantage, a business model that works inside the rules, and unit economics that do not depend on subsidy. The outcomes so far, an oversubscribed bond and a public listing, suggest the market is starting to agree. Not every bet in this area has worked, and several of our smaller fintech investments are still proving themselves.

Kanika Mayar, Partner, Investment and ESG Officer at Vertex Ventures Southeast Asia & India, describes the test this way:

“The first question we ask is whether the company knows more about its borrower than what a traditional bank would. At ABACUS, it is what its own data reveals about borrowers the credit bureaus cannot see. At Metafin, it is how the solar system is financed performs in real time. Building a lending business for a new borrower segment requires significant data for alternative underwriting models. Simply being ‘underserved’ is not the test. The test is whether you can build a high-quality loan book for a segment where a bank cannot.”

We hold ourselves to the harder questions too. We watch whether the default advantage holds as these companies scale, how they behave on collections, and whether repeat borrowing reflects real need or a debt cycle. Much of the evidence available to us is still company-reported, and we treat it that way.

The case

Underserved does not mean unbankable. In market after market it has meant unseen. The companies that learn to see these borrowers, price them properly and operate within the rules have built strong businesses in the process. The US$5.7 trillion gap is the size of that opportunity, and it is also why inclusion and returns point the same way. Closing it also advances the UN SDGs on access to finance and, through companies like Metafin, on clean energy. That is a by-product of building good businesses.

Vertex funds are investors in all of the companies mentioned in this article.