For decades, getting a bank loan has meant the same process of submitting financial statements, proving collateral where required, and waiting on the bank’s decision. That model has served traditional retail well. However, it doesn’t really hold up well in e-commerce merchant financing, especially given the breadth at stake: e-commerce platforms have generated US$13.2 trillion in B2B and B2C gross merchandise value (GMV) in 2025.
Given the sheer scale and the rich, contextualised data these platforms can generate, the logical move for banks would have been to plug in and enhance their underwriting potential.
Yet, in a unique turn, traditional institutions and banks have done the opposite. Held back by operational friction and prohibitive onboarding costs, banks have stayed disconnected from the e-commerce ecosystem.
This has inadvertently opened up an APAC e-commerce credit gap of US$1.2 trillion in 2025, according to a recent report by Quinlan and Associates, Banking on E-Commerce.
Most of that opportunity lies in Asia, which drives 55% of global B2C e-commerce Gross Merchandise Value, more than double the share of the Americas.
Within Asia itself, China alone represents 42% of global B2C e-commerce Gross Merchandise Value. Over the past decade, a wave of fintech lenders has emerged to swoop in and capitalise on this opportunity.
Still, the report finds that the door remains open for incumbents to take a more direct role in e-commerce merchant financing, whether through co-lending arrangements or lending to merchants outright.
The report indicates that banks lack access to real-time financial and operational data, which results in inaccurate credit profiling, incompatible product offerings, and the inability to control platform funds.
1. Banks Can’t See Real-Time Merchant Data
Banks have long leaned on historical financial and business data when extending SME loans. This is a method that leaves them without the data models to read more predictive, real-time signals like revenue trends and order velocity.
As a result, e-commerce merchants often get lumped into broader retail or SME risk pools, where their credit risk can end up overstated. Alternative lenders, working with richer data, have shown what banks are missing: reductions of up to 80% in 90-day non-performing loan ratios.
The barrier runs deeper than risk models. Many e-commerce SMEs carry financial records that are under-documented, insufficient, or unaudited. Due to this, a bank may render them ineligible for financing.
Also, many SMEs take up to two years to break even, making the kind of financial track record banks require a luxury few can afford. According to the Quinlan & Associates report, a small percentage of 23% of ASEAN SME merchants have received support from traditional banks.
2. Bank Loan Products Don’t Match E-Commerce Cash Flows
Even when e-commerce merchants clear the credit hurdle, the products waiting for them don’t fit. Traditional SME loans are built around stable, linear cash flows, while e-commerce revenues are highly cyclical and event-driven.
That structural gap makes the products hard to use as intended. For example, consider the scale of the swings. Peak-month sales in China’s e-commerce market run 68% higher than the annual average, while blockbuster campaign days on Shopee and Lazada drive daily sales to 14x and 10x their norms.
3. Merchant Funds Sit on Platforms, Beyond Banks’ Reach
A further barrier lies in where the money actually sits. Merchant funds are held on the platforms, not with the banks. This leaves lenders with limited visibility and even less enforceability over the cash meant to repay them.
The risks cut both ways. On one side, platform actions like account suspensions or fund freezes can abruptly choke a merchant’s cash flow and, with it, their capacity to repay. On the other hand, merchants themselves may spend those platform balances well before their repayment obligations fall due.
4. Manual KYC Makes Small Merchants Costly to Serve
Perhaps the biggest barrier of all is the sheer cost of getting a merchant through the door. Onboarding an MSME weighs banks down with manual processes, costly third-party services, legacy system integrations, and the ongoing compliance burden of cross-border activity.
For example, the manual load of missing documentation, secondary reviews, and mapping a corporate hierarchy to trace ultimate beneficial owners all still demand human attention.
Due to this, banks can take up to two years before they break even on the KYC costs of a MSME client.
3 Ways Banks Can Explore E-Commerce Lending
For banks eyeing the e-commerce boom, the question is how close to the merchant they’re willing to get. The report maps out three routes, each a step deeper into the market than the last.
1. Warehouse Financing, Where Banks Fund Fintechs
The most cautious is warehouse financing: extending a wholesale facility to a fintech that specialises in e-commerce merchant lending. The fintech does the lending while the bank supplies the capital. The bank’s participation involves minimal operational involvement.
2. Co-Lending Agreements, Where Risk and Yield are Shared
One step closer is co-lending, where a bank partners with a specialist fintech to jointly fund loans. Risk and yield are shared.
3. Direct Lending, Where Banks Own the Merchant Relationship
The last option is the direct route, in which banks lend directly to e-commerce merchants.
So far, most major banks have chosen the first door, content to participate indirectly through warehouse financing.
The report indicates that the real prize lies behind the other two, as co-lending and direct lending offer greater yield and the borrower relationship itself. The question for banks, then, is whether the safety of the sidelines is still worth it.
Featured image edited by Fintech News Hong Kong, based on an image by user6285028 on Magnific