Data innovation will lead the way for a change in the industry.

Driven by technological advancement and the increasing sophistication of the financial markets, the global landscape for supply chain finance has inevitably entered a new phase of intense competition and consolidation. While banks have traditionally dominated supply chain financing, the emergence of fintech firms has increasingly disrupted the competition with big data, AI and blockchain technologies. However, the journey is not always smooth sailing.

The wake-up call

Despite its rapid growth, the expansion in supply chain financing has been somewhat uneven. Greensill Capital, once a rising star amongst fintech unicorns in the UK, sought to revolutionise this by securitising advance payments. But the business complexity led to its collapse during the Covid-19 pandemic, which eventually led to its bankruptcy in 2021. The fallout also saw Credit Suisse losing over US$11 billion (S$15 billion) attributed to doubts over the valuation of some of its supply chain assets, narrowly avoiding a broader crisis.

Following Greensill’s fallout, US-based working capital manager Taulia acquired its clients, partnered with firms such as Airbus and AstraZeneca, before selling itself to SAP under the weight of economic challenges.

Meanwhile, C2FO, a relatively unsung US fintech company, operates a similar B2B model involving receivables and payables financing, eliminating credit risks and enabling early payment discounts. Founded in 2008, C2FO today serves 380,000 global customers, including Amazon and Walmart. Its business simplicity and steady growth provides a huge contrast against Greensill’s turbulence.

Regulatory storm brewing in China's fintech sector

China, being the world’s second-largest economy, also plays a vital role in global supply chains. While development in the supply chain finance market had been late, the sector enjoyed rapid growth, driven by policy support. To be sure, market intelligence firm IDC had projected the supply chain market in China to exceed RMB 40 trillion ($7.45 trillion) by 2024[1]. The industry is currently in a transformative phase marked by tighter regulations with leading fintech players such as Alibaba’s Ant Group, JD.com, Linklogis and SY Holdings.

It could be said that the peak of China’s fintech sector was marked by the high-profile IPO of Ant in 2020, which was touted at one point as the world’s largest unicorn valued at RMB 2.1 trillion. It was estimated that over 10,000 institutional investors expressed interest in the IPO, including sovereign wealth funds such as the Abu Dhabi Investment Authority and Singapore’s GIC. The IPO was eventually halted later that same year[2]. In 2021, following a frenzy of fintech IPOs in China, Hong Kong-listed Linklogis, another supply chain fintech firm, also faced allegations of inflated revenues[3], leading to a 90% plunge in its stock price.

A scarce find among a sea of China supply chain fintech stocks

Like C2FO, China-based fintech firm SY Holdings has steadily maintained its profitability over the last 10 years. The firm is an enabler in the industrial networks of the infrastructure, pharmaceuticals and commodities sectors. Leveraging data, SY Holdings addresses the financing challenges faced by SMEs[4] by adopting a strategy that is centred around the authenticity of transactions to assess creditworthiness.

Since its inception in 2013, SY Holdings has served over 18,100 SMEs and processed over RMB 248 billion in loan assets and is expected to double over the next five years. It also partners the top five leading infrastructure firms in China, addressing a multi-trillion supply chain financing market. On the back of its full year 2024 results, the firm recently announced a significant increase in profits exceeding 30%, underscoring its strong market position within the industry.

Approximately 30% of SY Holding’s SME clients in China are first-time borrowers with limited access to credit. The firm bridges this gap by providing timely financing solutions, in line with the firm’s mission to support SMEs. While SY Holdings lacks the capital required of traditional banks, it excels in partnerships with financial institutions, having collaborated with over 163 financial institutions.

By staying aligned with national policies, SY Holdings has demonstrated consistent growth and profitability with total cumulative net profits surpassing RMB 2 billion and over RMB 490 million in dividends since inception. It is currently the only Hong Kong-listed firm committed to a 90% payout ratio over three years.

Data innovation leads the way

One analyst commented that the firm’s growth potential had been largely driven by technology and data, which is closely aligned with China’s “Data Element X” plan[5] encompassing a three-year roadmap to foster advancements and unlocking multiplier effects in its big data models[6] to boost its GDP.[7]

By 2025, SY Holdings expects its platform services segment to contribute over 50% of its total revenue. A key driver here is its proprietary "Cloud Platform" which digitises the financing process with IoT, big data and AI, reducing loan approval times by 90%. According to the company’s management, suppliers had commented on being able to receive funding within the same day with minimal paperwork.

By harnessing and integrating AI into its business, the firm has been able to increase its operating efficiency. It has recently completed its integration of DeepSeek into its platform and is currently also exploring collaboration initiatives with a number of leading AI platforms. The company has also established a dedicated fund to incubate promising AI agents, while also providing supply chain financing solutions within the AI and robotics space.

With over RMB 200 million invested into developing its platform, the firm is backed by a research and development team of more than a hundred staff, hailing from leading tech behemoths such as Huawei and Tencent. Its data algorithms improve the efficiency of risk management by 80%, has the ability to process 200-page contracts in five minutes with over a 90% accuracy rate, and enables "on-arrival financing" through real-time tracking on its smart construction systems. Thanks to the firm’s data algorithms, it is also recognised as one of CNBC’s "Top 200 Global Fintech Companies) and Forbes China’s "Top 50 Financial Tech Enterprises" in 2024.

Opportunities abound for global expansion

Various Chinese fintech firms like Lexin, Qifu and Akulaku have entered the global stage. SY Holdings is also actively charting its overseas expansion by setting up a regional hub in Southeast Asia.

As part of these efforts, the firm has participated in the China-Singapore Demonstration Initiative on Strategic Connectivity, aiming to become the region’s first international supply chain fintech enterprise. Elsewhere in Southeast Asia, the firm has also partnered and invested in a leading Southeast Asian private equity firm which has a significant exposure within the financial services and fintech sector.

On the outlook, SY Holdings is expecting a positive one ahead attributed to high demand and the relatively fragmented competition in supply chain financing in Southeast Asia. Technology will remain a core enabler in driving the firm’s growth strategy and value-add to the business operations, which will reduce working capital cycles and improve efficiency for companies across the supply chain. At present, SY is already serving merchants who are using TikTok, Shopee and Shein to sell their products globally. It has also recently collaborated with Singbada, a supply chain tech provider aimed at the apparel industry.

As the global economic landscape continues to evolve and digital technologies keep advancing, growth opportunities for overseas expansion remain robust and should warrant close attention from industry watchers.