United Bank for Africa (UBA) is celebrating its 75th anniversary. Among its hallmarks is an unwavering commitment to driving the growth of small and midsize enterprises (SMEs) in Africa.

For UBA—boasting $20 billion in assets, $454.2 million in pretax profits in 2023, and a presence in 20 markets on the continent and four global centers—empowering SMEs means fueling Africa’s economic development.

Its home market of Nigeria is a poster case. With a portfolio of over a million SME clients and a loan book of $90 million, the bank has been instrumental in ensuring that SMEs remain the engine of growth.

Last year, the bank set aside $6 billion to lend to SMEs in partnership with the Africa Continental Free Trade Area secretariat, a program to be implemented over three years. The partnership augments the bank’s defining strength: its ability to support intra-African trade and investments critical for SMEs’ growth.

To enhance convenience for SMEs, UBA has signed up to the Pan-African Payment and Settlement System. The bank also ensures easy transaction processing through its UBA Afritrade and UBA Connect.

UBA has also become a pacesetter in financing women-owned businesses, owing to its strong belief that women should not be left behind in Africa’s socioeconomic development. —John Njiraini

In making this award, the Global Finance team notes DBS’ close focus on the specialized needs of SMEs—from the clarity of the CEO’s mission statement to the detailed structure and effectiveness of the bank’s SME products.

Outgoing DBS Group Chief Executive Piyush Gupta, who will step down in March 2025, has acknowledged that banks worldwide underserve SMEs. Under his guidance, DBS has worked to rectify this failure.

Together with Enterprise Singapore, DBS launched the ESG Ready Programme, an end-to-end program that aims to help local businesses—especially SMEs—become future-ready by building capability and capacity in sustainability. Participating companies can access a panel of sustainability specialists to guide them on their respective sustainability journeys.

“Banks have not thought enough about the battleground of tomorrow,” said Gupta in a 2015 interview with the National University of Singapore’s Business School. “But it is changing—in the last two years, digitization has now become the No. 1 agenda for most banking CEOs.”

Before the pandemic, DBS had relentlessly leveraged emerging technologies to help SMEs, especially micro and small enterprises, streamline services and manage credit risk. Digital payments, online banking, and blockchain technology emerged and became established during Gupta’s tenure, emphasizing SMEs.

The judges noticed that DBS had developed algorithmic models powered by artificial intelligence (AI) and advanced data analytics to alert the bank to signs of potential trouble SME customers might face, substantially reducing insolvency risk.         —Simon Littlewood

In operation for over 80 years, Banreservas offers more than 315 physical service centers in the Dominican Republic—including traditional bank branches, mini branches, and mobile branches—along with roughly 1,900 ATMs. SMEs account for 16% of the bank’s business, or approximately $1.5 billion, giving Banreservas a 28% market share.

Banreservas offers its roughly 130,000 SME clients a broad array of financial services. Fomenta Pymes (“Promotes SMEs”) is a bank program providing small businesses access to financing products, credit cards, management services, payroll services, and other benefits. Special events include monthslong “loan fairs” through which SMEs shop for financing. In its 2024 iteration, the Banreservas loan-fair program disbursed 5,800 loans, totaling about $238.5 million. These were given to SMEs working in multiple sectors: tourism, construction, commerce, education, healthcare, social services, industry, agriculture, and livestock, among others.

Additional bank offerings include Programa Preserva, a workshop-based program that promotes economic security through saving. Programa Coopera, meanwhile, promotes the Dominican Republic’s socioeconomic development through financial support of businesses throughout the country, including those located in economically vulnerable areas.   —Laura Spinale

SMEs contribute 15% to Grupo Financiero Banorte’s loan portfolio. The financial institution works to better serve that market through an SME expansion plan instituted over the past year. As part of this program, Banorte has focused on increasing its SME offerings to include a full suite of tailored financial products and services. These include various loan types, business advisory services, tax advisory services, and strategic alliances with companies offering products and services of value to the SME market.

Credit is a significant part of the SME expansion plan; and the bank has instituted a new pricing structure, providing credit conditions more favorable to clients. SMEs qualify for these rates through an application process that provides a more holistic view of each SME applying. Available SME financing products include working capital loans, equipment financing, expansion loans, and lines of credit. One of these, Mujer PyME, is a credit facility targeted to women-led SMEs.

Additional advancements include the integration of biometric signatures in branches and a time-saver for account openings.          —LS

Located in Moldova, MAIB is this year’s regional winner for Central and Eastern Europe. As the country’s largest commercial bank and lender, MAIB has almost 37,000 active customers, an increase of about 13% year-over-year (YoY); and it captures approximately 43% of all newly registered companies in Moldova. MAIB has continued to consolidate its position within the SME sector—about 6,000 companies, primarily within IT, winemaking, and food industries—earning the bank an approximately 37% market share. Despite challenging economic conditions, various strategic efforts have helped the bank achieve record growth within its SME business unit

The bank leverages a customer-centric approach by using feedback to tailor products and services to SMEs. MAIB also emphasizes data-driven decisions, which have helped the bank maintain a profitable loan portfolio despite a declining demand for loans among SMEs, fluctuating grain prices resulting from regional conflicts and weather conditions, and falling interest rates.

To help attract SME customers, MAIB launched internet and mobile banking solutions. The bank created its Business Banking Customer Care Service, which has a dedicated line for SME support and specialists who can resolve customer issues. MAIB’s products and services include night and weekend payments, remote onboarding, factoring, and digital signatures on credit contracts.

The bank has partnered with over 150 companies that sell their products, such as agricultural machinery, photovoltaic panels, and cars, through loans that MAIB originates. The bank is also the first in Moldova to offer consulting services to its customers in accounting, business, and human resources.        —Andrea Murad

BTG Pactual Empresas’ SME lending portfolio reached 22.1 billion Brazilian reais (approximately $3.9 billion) in the first quarter of 2024, with its SME credit book growing 52% YoY. SME business now accounts for 12% of BTG Pactual’s total portfolio.

The bank attributes its SME growth in part to its digital capabilities. Its digital platform offers a complete, integrated portfolio of SME products and services—providing access to the bank’s credit, guarantees, insurance, investments, foreign exchange, and derivatives products. Associated services accessible via the platform include creation of invoices payable by QR code; online invoicing; instant electronic bank transfers; open banking; payments to suppliers, tax authorities, and utilities; budgeting and categorized spending services; digital receipts; and other capabilities. The platform offers more than 45 integrations, including Telegram and Google Workspace, along with an extensive range of productivity improvement products.

Speed is a crucial platform benefit. According to the bank, the platform enables the bank to disburse 95% of its loan funds in less than 10 minutes, 16 times faster than its competitors.

Agriculture is a big part of the Brazilian economy, and BTG Pactual Empresas offers services tailored to this sector. These include credit lines for agricultural products (fertilizers, pesticides, seeds); equipment financing; and infrastructure financing for the construction of silos, warehouses, and other facilities.

Activities addressing environmental, social, and governance (ESG) issues are also important to BTG Pactual. Of its loans to corporations and SMEs, 72% are subjected to social, environmental, and climate-risk analysis, in line with international best practices. R$8.9 billion of its lending portfolio aligns with the bank’s sustainable financing framework.          —LS

Founded in 1992 by the Bahraini government, Bahrain Development Bank (BDB) is part of that country’s efforts to diversify its economy into non-oil-producing sectors. SMEs are vital to those efforts. BDB strives to support entrepreneurs and SMEs through loans, financing, and advisory and mentorship programs and conferences tailored to the SME market.

The bank offers financial products for various types of SME businesses, including agriculture and fisheries, manufacturing, education, health-care, tourism, and transportation companies. It also provides financial services targeted to women. Over the last several years, the bank has invested in digital transformation. One result of that is tijara, BDB’s digital banking arm. This platform offers SMEs quick access to financing and efficient processing of business transactions, salary transfers, and other payment services.          —LS

In September, the Royal Bank of Canada (RBC) released its annual small-business poll. Results indicate that 51% of Canadians are considering starting a businesses. RBC wants to help them.

The bank operates in more than 30 countries and serves more than 17 million clients worldwide. As of 2023, it had about CA$3.6 trillion (approximately $2.6 trillion) in assets and over 91,000 employees. To improve the customer experience, RBC has invested heavily in digital banking and AI technologies.

RBC strives to support SMEs at every stage. The bank offers various financing and loan options for SMEs, including unsecured and operating lines of credit. It also administers Canada Small Business Financing Loans. Special programs target Black entrepreneurs.

A knowledge base on the bank’s website instructs would-be entrepreneurs at the very earliest business stages. Guides for starting a business, validating ideas, creating business plans, determining startup costs, choosing a business structure, and exploring business financing are available.

Beyond typical banking, RBC also offers several business services, mostly digitized. In the field of payment processing, it offers medical billing software for hospitals and clinics, point-of-service systems, and services enabling merchants to offer buy now, pay later options to their clients. Marketing services help SMEs explore consumer spending patterns, find clients, and embark on global trade. The bank offers a host of payroll and HR solutions. Operations services help entrepreneurs register and incorporate online, protect businesses against cyber threats, automate accounts payable, and perform other tasks.       —LS

Headquartered in Spain and with operations throughout Western Europe, Santander is named as the best bank for SMEs in Western Europe for the third year in a row. The bank has a wide range of targeted products and services to meet the needs of its customers, which include 114,000 SMEs that make up over 91% of corporate customers and over 95% of digital customers in Portugal.

Through its platform, Santander X, the bank has helped over 7,000 SMEs scale their businesses through training, advice, and other resources. The platform’s training enables SMEs to create a digital presence, expand domestically and internationally, and grow and maintain their workforce. Companies can also participate in competitions for cash prizes and other awards. In addition, this platform creates a global networking community for SMEs to connect with other businesses, providing discounted third-party resources and services.

Through various initiatives, Santander supports SMEs looking to expand abroad. Through the Santander Trade platform, SMEs can analyze different international markets, find international business partners, and support shipments overseas; while the Santander Trade Club helps SMEs find new distributors and suppliers. The bank’s “One Europe” strategy helps identify good practices in other countries—practices that can then be implemented domestically.

The bank develops products and services with the customer in mind, through engagement and solicitation of feedback. The result is personalized products across digital channels and enhanced user experiences.  —AM

In Brazil, the Pix payment system lets people, corporations, and governments transfer and accept funds instantly, 24 hours a day—even when banks are closed. Released in late 2020 by the Banco Central Do Brasil, Pix has been lauded for its convenience and the financial services it provides to Brazil’s significant unbanked and underbanked populations. (Statista reports that more than 9% of Brazil’s adult population remains unbanked.)

But since Pix payments are both instant and irreversible, the innovation has enabled theft, fraud, and other crimes. Countering this fraud is just one of the topics tackled over the past year by the world’s best fintech innovation labs, incubators, and accelerators. Other technological innovations from these labs address everything from improving anti-money laundering (AML) compliance and easing underwriting processes to speeding up customer onboarding and improving cash management for small and midsize enterprise (SME) clients.

Victor Tanure, new-business manager for the Data Rudder data intelligence company, is most concerned about Pix fraud.

According to Data Rudder research, one in six Brazilians has been a victim of a Pix scam. Pix-based crimes run the gamut. People have been kidnapped and forced to use their mobile phones to remit irreversible payments to the kidnappers. More common are “social engineering” scams (involving use of false social media profiles, particularly on WhatsApp, to impersonate the victim), the creation of credit card clones, and the theft of mobile devices that give criminals access to the Pix user’s credentials and cash. Although Pix and credit card insurance often reimburse victims, it’s not enough. According to a Data Rudder survey, 46% of victims get no money back. Concurrently, 63% of respondents believe it is the bank’s responsibility to reimburse them for these thefts. It’s not.

To solve this problem, boostLAB, which is powered by BTG Pactual, accelerated Data Rudder.

BTG Pactual created boostLAB in 2018 to help the bank become a destination for tech companies banking in Latin America. This acceleration-and-investment program is part of the bank’s early-stage venture capital (VC) strategy. In 2023, the lab honed its focus to concentrate on startups between seed and Series A funding stages. This move aligns with BTG Pactual’s desire to collaborate with companies that have already validated their products in the market and that possess a scalable business model. The lab, which had previously nurtured 76 startups, invested 500,000 Brazilian reais (approximately $91,000) in each of the six startups accelerated last year. In exchange, BTG Pactual received 3% equity.

In a nod to the fantastic technology of the sci-fi film “Back to the Future,” the Data Rudder artificial intelligence (AI)-powered anti-fraud solution is called DeLorean, after the time-traveling car in the film. It analyzes Pix transactions conducted through Data Rudder’s more than 100 client institutions in Brazil. DeLorean determines the legitimacy of these transactions based on the user’s historical spending patterns, among other factors, and determines—in less than 200 milliseconds—whether the transfer is likely legitimate and should be allowed. Verification processes need to be that quick to detect and halt possibly fraudulent transactions faster than Pix can process them.

Tanure credits boostLAB with helping his company tailor its innovation for a specific, much-needed purpose. “We had automated machine-learning technology. We could have applied the DeLorean to stop churn, to solve KYC [know-your-customer] problems,” he says. Working with boostLAB, Data Rudder chose to focus on preventing Pix fraud.

“We gave Data Rudder a structure of mentorship,” says Gabriela Lima, VC director at BTG Pactual. “Our fraud prevention director at BTG Pactual was having weekly or biweekly meetings with Data Rudder in order to access the platform, do some tests, and connect them with people at Brazilian banking organizations. We helped them with some commercial initiatives and product development. [DeLorean] didn’t start as an anti-fraud solution. Data Rudder was very deep in machine learning, big data, and predictive analytics for several business issues. We helped them focus on Pix as instances of fraud soared.”

Let’s look at what’s brewing at other fintech innovation labs worldwide.

As illustrated by work at Akbank LAB, Arab Bank Innovation Hub, EFG EV Fintech, the National Bank of Kuwait, and Morgan Stanley Inclusive Ventures Lab, the Middle East and North Africa region (MENA) is a hotbed of fintech innovation.

Founded in 2016, Turkey’s Akbank LAB wants to be the technology partner of choice for innovative tech startups worldwide. Its 10-week accelerator program, “Boost the Future,” which is in its fifth year, helps entrepreneurs scale their businesses. Thus far, 64 startups have graduated from the lab. While the lab offers no direct investment, Akbank often becomes a paying customer of these startups. Investment opportunities are sometimes available through the bank’s VC arm.

Akbank’s lab enables it to deliver offerings to customers more quickly. Lab professionals evaluate lab applicants for their offerings’ alignment with the needs of each Akbank business unit. Accelerated processes mean that proof-of-concept (POCs) for new products are usually developed within six months, compared to a typical two-year timeline. Innovations from the lab include products to speed up and automate loan paperwork and a single-dashboard solution for monitoring AML processes—including sanctions screening.

Additional lab components include Akbank+, an internal innovation program for bank employees to develop ideas for potential new technological solutions for use in the bank; and the Case Campus boot camp for students who want to explore entrepreneurship; and hackathons. Disaster tech was the theme of the lab’s most recent hackathon.

Arab Bank Innovation Hub was founded in 2018 to accelerate the development and adoption of disruptive technologies within Reflect Neobank, its fully digital bank. The hub has several locations—including in Aman, Cairo, and Dubai—and several arms. Among those arms is AB iHub, a program that germinates new ideas by facilitating collaboration among Arab Bank employees and startups. Here, fintech startups transform bank employees’ raw ideas into financial services prototypes.

As part of the lab, AB Xelerate (formerly AB Accelerator), the VC arm of Arab Bank, funds the acceleration of emerging technologies for adoption within the financial institution. Its goal is to expand or disrupt financial services for Arab Bank clients. Through this accelerator, AB iHub has tested more than 30 POCs and pilots and entered into a dozen commercial collaborations. Innovations have focused on supply chain financing for SMEs, AI-powered document verification and authentication, digital onboarding, and blockchain and its application to KYC compliance.

Finally, AB iHub hosts the Artificial Intelligence and Advanced Data Analytics Academy. Here, bank employees use AI and data science to create products for anomaly detection, deposit stickiness (predicting clients’ future deposit balances), and lead tech (generating actionable customer leads).

EFG EV Fintech is the brainchild of EFG Finance (a wholly owned subsidiary of EFG Hermes Holding) and Egypt’s government-backed VC fund, Egypt Ventures. The micro-VC accelerator seeks out and supports fintech companies. EFG EV Fintech says it boasts the country’s largest fintech portfolio. Companies nurtured operate in the insurance tech, regulatory tech, agricultural tech, digital banking, and SME-lending sectors. In addition to offering accelerated companies investments ranging between $25,000 and $500,000, EFG EV Fintech provides workspaces, mentorship, legal advice, and other services.

The National Bank of Kuwait (NBK) Group Digital Office, established in 2021, focuses on delivering digital excellence in bank operations in that country, along with its bank operations in Egypt, Saudi Arabia, the United Kingdom, and France. The lab focuses on innovations in digital product design, data analytics, digital marketing, and project management. While primarily an in-house operation, the lab does a small amount of work with outside startups. These startups provide specific components for lab innovations, notably components for personal finance management and identity verification products. Notable work includes deploying analytics to extract actionable bank insights from complex data sets. According to NBK officials, this process helps boost customer acquisition and optimize product cross-selling.

Digital innovations such as the Weyay digital bank and app have arisen from the lab. Weyay is the first digital bank in Kuwait. Its services are geared to young people.

Morgan Stanley Inclusive Ventures Lab is a five-month accelerator designed to scale startups in the seed to Series A funding rounds. It strives to nurture companies led by traditionally underrepresented populations, including women and people of color. Launched in 2017, it has since worked with founders in the Middle East and companies in Africa and Europe. The lab provides these companies access to investors and the tools and resources they need to scale. The lab has thus far nurtured 92 companies, with portfolios exceeding $923 million. Capital investment from Morgan Stanley in each startup is either $250,000 out of the New York–based program or £250,000 (about $322,000) out of the London office, depending on the startup’s location, in exchange for 5% equity in each company. The lab culminates with a demo day during which participants present to a network of investors, potential business partners, and customers.

Asia has seen significant innovation from DBS Asia X (DAX).Hosted by DBS Bank, DAX is one of Singapore’s largest innovation centers. In its 16,000-square-foot coworking space, DBS employees, startups, and the broader fintech community come together to innovate. The lab has three aims: to engage with the startup community, to develop and foster a culture of innovation within the bank, and to serve as a customer-experience hub. The lab concentrates on several technological areas: AI, data science, immersive media, and the Internet of Things.

Among the most significant components of the lab is the Startup Xchange program, matching startups with DBS project teams that focus on emerging technologies. Among innovations from the lab is the Jobs Intelligence Maestro, Southeast Asia’s first virtual bank recruiter. Powered by AI, the solution addresses the time-consuming, repetitive tasks faced by the talent acquisition department at DBS. The innovation automates the short-listing of candidates for bank jobs. Talent acquisition professionals need only to review the short list when choosing candidates for face-to-face interviews. DBS estimates that the platform saves 40 professional work hours each month, allowing recruiters to focus more on candidates most qualified for the jobs advertised.The lab also regularly runs hackathons and workshops to spur innovative ideas.

In Europe, Alior iLab for Fintech (formerly RBL_START) is a startup accelerator for companies in the finance and insurance sectors that have already developed a minimum viable product. Alior Bank’s iLab program focuses on nurturing companies that can help the Polish bank improve its products and services, optimize its processes, increase revenue, reduce costs, and create new business models. The lab offers startup mentoring, access to customers and partners, and the opportunity to test solutions in a banking environment. Over its six years of operation, the lab has nurtured more than 60 startups. Alior’s corporate venture capital arm has directly invested in two of them. Innovations in mobile banking, online and app-based payment, invoice management, and online currency exchange are some of the products that have arisen from the lab.

Online cash management tools have also been the focus of recent innovations in South America. Based in southern Brazil, Ailos Cooperative is a financial network comprising 13 member credit unions representing over 6,000 employees and serving more than 1.6 million members. This network strives to provide innovative financial services to its members and customers. Its innovation lab, founded in 2018, is a distinct area within the network. It explores innovation management, technological innovation, change management, digital transformation, and more. It has thus far nurtured 69 startups in its Blumenau Innovation Center. Sistema Ailos does not offer direct investment in these companies. Instead, startups that offer products matching the network’s needs can become suppliers. One innovation that arose from the lab was Financial Manager Ailos 360°. This digital financial system lets users control their bank accounts and financial planning simply and intuitively. It integrates accounts from various financial institutions into one platform, giving customers a complete view of their finances and assisting them in financial planning and decision-making.

The Banco Bradesco inovabra lab was launched in 2013. It offers a physical and digital co-innovation environment, serving over 200 resident startups and 1,500 that are connected. Its Inovabra Fund invests in startups aligning with bank operations through a 100% owned capital vehicle of Bradesco called FIP Inovabra. The fund’s investments range from 20 million to 75 million Brazilian reais for a minority share in the companies nurtured.

Innovations to arise from this lab include the cash flow management tools for microbusinesses and SMEs from software vendor Asaas, which lets clients manage their cash flow through a single financial dashboard. Clients use the dashboard to view all receivables and receipts, along with their respective status (due, overdue, paid), and obtain several other services. In addition, the bank launched a “credit as a service” solution, allowing e-commerce sites and enterprise resource planning programs used in many businesses to offer working capital and microcredit to their clients directly from the platform.

Additional labs of note include those hosted by Fidelity. Innovations at Fidelity come from two arms. The first is a research unit called the Fidelity Center for Applied Technology. The center has recently started a fellowship program through which it works with selected external startups.

The second arm is the Fidelity Labs incubator for new software businesses and commercial solutions.

Also doing significant work are Barclays Eagle Labs, BNY Mellon Enterprise Innovation Group, BofA Breakthrough Lab, Citi Innovation Labs, Deutsche Bank Innovation Labs, Elevator Lab powered by Raiffeisen Bank International, ING Labs, OTP Bank Innovation Lab, TD Lab and TD Workshop of TD Bank Group, Up2Stars/Intesa Sanpaolo, Visa Global Innovation Center, Wenov by Attijariwafa, and Yapi Kredi FRWRD.

At some financial institutions, innovation is germinated by staff. For example, in Asia, CTBC employees have worked hard to stop mule accounts. These are bank accounts used to facilitate illegal activities such as fraud and money laundering.

Founded in 2018, the CTBC Data and AI R&D Center in Taiwan employs more than 200 people. It strives to leverage technology in transforming financial services to better meet customer needs. Areas of focus include document tech, verification tech, marketing tech, data tech, regulatory tech, and investment tech. Divisions include the Blockchain Laboratory, improving blockchain processes for corporate clients; the UI/UX Laboratory (user interface and user experience), focusing on providing solutions to meet customer demands in retail banking; the Computer Vision Laboratory, dedicated to image-recognition and processing technologies; and the Natural Language Processing Laboratory, which focuses on semantic understanding.

AI is a significant part of these endeavors. “By integrating decision AI and generative AI [GenAI] technologies, CTBC Bank aims to maintain its leading position in the financial technology field, offering customers more intelligent, personalized, and efficient financial services and standing out in a highly competitive market,” says Friedman Wang, a CTBC executive vice president and head of its AI R&D division.

Products to arise from the center include AI Skynet, an innovation that made CTBC the first bank in Taiwan to collaborate with the National Police Agency. This joint effort combats fraud using smart, AI-powered platforms at the bank’s network of more than 7,000 ATMs.

Wang reports that, in the 2023 fiscal year, scam losses among consumers in Taiwan amounted to approximately 89 billion Taiwan new dollars (about $2.8 billion), numbering more than 37,000 scam cases. However, that figure may be much higher: It is believed that only a little more than half of the victims in Taiwan report scams to the police.

Among these scams is the creation and use of mule accounts that place a degree of separation between the criminal organization and illicit funds, making it difficult for law enforcement to track the money.

Enter AI Skynet. “AI Skynet [was] mainly introduced to prevent and detect mule account holders involved in financial scams. The total number of reported mule accounts has grown at a compound annual growth rate of 35% over the past two years in Taiwan, which has resulted in a significant concern in the industry,” Wang says.

The innovative use of AI Skynet has significantly enhanced the bank’s fraud detection capabilities at ATMs. According to Wang, “Massive historical data are used to train the AI to recognize abnormal behaviors and predict the likelihood of a customer being reported as the mule account holder.” AI Skynet has also significantly improved operational efficiency at CTBC, providing a 70-fold increase in the number of suspicious ATM transactions monitored, without any increase in staffing.

Additional innovations arising from the Internal Data and AI R&D Center include AI Cheque Check, which strives to streamline the check-deposit processes by using advanced AI to read traditional Chinese characters for speedier verification (In AI, the recognition of Chinese characters is considered much more difficult than the recognition of Latin scripts).

At Spain’s CaixaBank, the internal Customer Experience LABs and Insights Center are a research hub. Several new projects have recently arisen from the lab. Among them is a digital onboarding capability for corporate legal representatives. This innovation was developed to accommodate foreign companies that wish to do business in Spain. Previously, these companies needed a Spanish legal representative to appear in real life for corporate registration processes. To ease processes for foreign corporations, CaixaBank developed a digital pathway for corporations to register legal representatives without requiring those representatives to appear at a physical branch. This process complies with all registration regulations set by Spain’s financial intelligence agency.

Personal loans are another area of innovation. In January, the bank launched a fully digitalized contracting process for personal loans, providing customers with immediate access to loans upon completing the application.

SEBx is the laboratory arm of the SEB Group, owner of the leading corporate bank in the Nordic countries. In 2023, the bank completely redesigned SEBx to engender lab innovations that reshape the future of finance. Thus far, the lab has built a highly skilled 16-member internal team, formed a broad external collaboration group, and begun spearheading GenAI adoption for SEB Group.

The lab plans to use AI innovations to foresee and prevent financial crimes, including fraud and money laundering; to understand, model, and predict financial systems, enabling more-informed business decisions; to create a hyperpersonalized customer experience; and to make banking a driving force in creating a sustainable and resilient society.

One POC that came out of the lab is the automation of customer authentication. SEBx notes that most existing customer-authentication processes are binary: Customers are either completely authenticated and have access to all available funds, or they are not authenticated and have access to nothing. By combining multiple data points for identification, SEBx has created an application that takes a more nuanced, risk-based approach to identification and authentication. It grants gradual access rights for viewing and acting on accounts based on the customer’s identification score. SEBx believes this solution will better serve customers while improving security.

Bank ABC is based in the Kingdom of Bahrain. It founded ABC Labs in late 2019 to help the bank fulfill its goal of becoming MENA’s leading “digital bank of the future.” Reaching that goal entails deploying strategic initiatives to futureproof the bank’s operations and offerings. As a result of these efforts, ABC has already developed a cloud-based, mobile-only offering called, ila Bank, and its AI-powered digital assistant, Fatema.

More recently, ABC Labs rolled out an enterprise-wide innovation program. This program is designed to enable business growth, increase agility and efficiency, improve skill sets throughout the organization, and strengthen brand equity.

Innovations to emerge from the lab include a solution developed with JPMorgan Chase and the Central Bank of Bahrain to enable institutional clients to remit high-value cross-border payments instantly, 24 hours a day. In addition, a new portal provides a digital, cloud-based gateway for corporate clients to access cash management, trade finance, and supply chain financing services.

Arising from Moody’s banking innovation team is the Automated Credit Memo, a new application combining GenAI with other technology, data, and analytics to help bank underwriters working for Moody’s customers to create comprehensive credit memos more easily. Moody’s officials note that the preparation of credit memos is “a process known for its time-consuming nature. In response, we leveraged [GenAI] to … streamline this process significantly. By enabling the generation of comprehensive credit memos with a simple click, this tool can reduce the time required for their preparation by more than half, offering substantial efficiency gains.” In addition to automating manual processes, the Automated Credit Memo helps create a standard and consistent narrative for all credit memos written in an organization, regardless of author or loan complexity. Its market release is slated for this year.

A second arm of the company, Moody’s Generative Intelligence Group, uses the power of AI and machine learning to build solutions that create internal and external efficiencies. Most recently, the group explored how to apply GenAI to Moody’s extensive propriety data, resulting in Moody’s Research Assistant.

“The inception of Moody’s Research Assistant was driven by the goal of simplifying the process of finding relevant insights for our clients,” the officials add. “Engaging in conversations with [more than] 100 customers, we sought to deeply understand their specific report-creation and analysis needs. This dialogue helped us identify the crucial data and insights required by our customers, ensuring that the Research Assistant was tailored to meet these needs effectively. As a result, this tool can facilitate a more efficient credit analysis, peer comparison, data gathering, and report-building process, potentially saving customers up to 27% of their time.”

The Research Assistant offers a comprehensive view of various risk domains, including credit, climate, cyber, compliance, and supply chain risks. It generates “new insights using Moody’s extensive research, data, and analytics. By rapidly synthesizing large volumes of information, it allows for quick data analysis, development monitoring, entity comparison, insight discovery, and workflow automation. This efficiency transforms research tasks that previously took days into minutes, significantly freeing time for strategic decision-making and in-depth analysis,” the Moody’s officials add. The Research Assistant is available as an add-on to CreditView, Moody’s flagship ratings and research solution.

Additional internal labs of note include Bancolombia Innovation Center, BBVA AI Factory, Capital One Lab, CIB Innovation Group, Goldman Sachs – GS Accelerate, Mastercard – Labs as a Service, and PayPal Innovation Labs.

Venture capitalh firms and consultancies understand the value of fintech innovation. No wonder they host a variety of fintech labs. Among the most notable are Accelerator Frankfurt, Deloitte Catalyst, Plug and Play, Startup Bootcamp, Startup Wise Guys, Synechron, and Y Combinator.

Some fintech innovation labs work to improve economic and social conditions, and some go where no one has gone before.

The European Investment Bank Group (EIB) is the world’s largest multilateral financial institution, owned by the 27 European Union member nations. In 2023, the bank financed €19.8 billion (just under $22 billion) of investment as well as digital and human capital in innovation. Its mission is to close the gaps in innovation goals and skills identified by EU policymakers. To do so, it provides expert advice and customized solutions to public and private sector clients. Advisory work covers the innovation, energy, transportation, digitalization, and social infrastructure sectors. Solutions include designing sustainable infrastructure projects, assisting businesses with financial structuring, and advising on environmental and social impact assessments. In all its work, the EIB strives to ensure that investments align with EU policy objectives, particularly those that promote sustainable development worldwide.

Enter the EIB’s Space Finance Lab. It is the first lab offered by EIB to have a specific thematic focus. It aims to address the need for bank investments that bolster European strategic autonomy in space exploration. The lab provides a safe place for thought leaders and space-technology practitioners to exchange know-how and discuss their needs. Over several years, the Space Finance Lab has brought together representatives of the EIB, the European Commission, the European Space Agency, the EU Agency for Space Programmes, 10 banks, and 50 emerging European space companies. These gatherings create a bridge among these organizations, enabling them to dive more deeply into space technology’s challenges, share knowledge, and develop new financial products for the space industry.

Most significantly, the Space Finance Lab combines the acumen of the investors with the knowledge of the experts, ultimately addressing the financing and growth challenges of companies and disrupting the typical framework in which they raise financing. Sessions have focused on financing in the European space industry, upstream activities (transportation of objects into space, operation of ground stations, and space exploration), and downstream activities (handling data generated by the upstream activities). The sessions resulted in a clear list of objectives and follow-up actions that will be the starting point for the next Space Finance Lab, slated for late 2024.

Meanwhile, back on Earth, the Brazilian Financial Innovation Lab is a think tank that promotes the financing of socially and environmentally sustainable projects. Operating primarily online, it is an initiative of the Brazilian Development Association, the Inter-American Development Bank, and the Brazilian Securities and Exchange Commission. It was created in 2017. Its members include more than 359 public and private entities—including government ministries, financial market regulators, insurance and capital market institutions, public and private companies, and fintechs. Its fintech working group promotes open innovation projects in fields such as crypto assets and solutions for using data to identify and solve environmental, social, and governance challenges.

Similar efforts are taking place in Colombia. After the 2021 social unrest and protests in that country, the Association of Banking and Financial Institutions of Colombia (Asobancaria) began identifying ways to better serve the banking needs of diverse populations, groups, and territories. The Asobancaria Social Innovation Lab is part of this effort. Its goal is to build and maintain communication channels and active collaboration between different segments of society and the banking sector, mainly promoting financial inclusion of vulnerable populations and underserved territories. The lab works with women, seniors, youth, rural populations, ethnic groups, migrants, disabled groups, and the LGBTQ+ community. It strives to provide financial and credit alternatives to these populations.

Important components of the lab are “opportunity fairs.” These fairs target individuals living in moderate-to-extreme poverty who cannot access the formal financial system, introducing citizens to new financial products developed especially for their socioeconomic group. Eight of these fairs took place last year. A second group of fairs, dubbed MiPymeLab, strives to connect small entrepreneurs with financing services.

Other significant social and economic development labs include Copenhagen Fintech Lab, Cyberport, the Dubai International Financial Centre’s DIFC Fintech Hive, FinTech Innovation Lab, and Seoul Fintech Lab.

Meanwhile, some innovation centers are unaligned with banks, VC firms, or economic development organizations. Among these is the Boston-based MassChallenge, a 501(c)(3) accelerator supporting early-stage startups. Its program offers mentorship, training, office space, legal advice, and access to funding. The Lisbon-based Beta-i helps new and established businesses grow by providing innovation services in acceleration, corporate innovation, and education. Frankfurt’s TechQuartier caters to fintechs and other types of startups. It offers a broad partner ecosystem. Additional independent labs of note include Accenture’s Fintech Innovation Labs and Tenity.

Our initial call attracted entries from innovators touting their achievements at the global, regional, and local levels. Global Finance also received nominations for the top innovation labs of the year from correspondents and external sources. The editorial board evaluated entries and nominations and vetted them with independent research. Winners were selected following rigorous debate.

Issuance of “impact” bonds, sometimes referred to as GSS+ bonds—green, social, sustainability and sustainability-linked instruments—totaled $939 billion in 2023, a slight 3% improvement over 2022, according to Bloomberg data. The sector has yet to match the record heights of 2021.

Green bonds have dominated the impact bond category from the beginning, and 2024 is unlikely to be different. Credit Agricole analysts expect green bonds to account for almost two-thirds (64%) of GSS+ issuance this year. Other label types will be much further behind; sustainability bonds, which have attributes of both green and social bonds, are projected to make up 16% percent of the total, and social bonds 12%.

Why does sustainable finance remain so deeply green?

“There’s a sense of purpose about global climate change” that seems to transcend other impact bonds, says Vulturius. “Social bonds have always played second fiddle to green bonds.” Social bonds seized public attention during the Covid-19 pandemic, when so many people required unemployment support and social interventions, but since then interest has waned, he notes.

As for sustainability-linked bonds (SLBs), which seemed poised for a breakout in early 2022, they could now be at a crossroads. SLBs suffered “another setback” last year, “with almost $20 billion less in new issuance compared to 2022,” according to SEB Group. But “the market has now mostly learned its lesson about the importance of integrity, and how to mitigate greenwashing risk.”

That being the case, “SLBs should record a modest progression” this year, predicts Credit Agricole, while Scandinavia’s Nordea Bank, a leader in SLBs, also expects these “transition finance” instruments to gain momentum.

“It’s important to recognize that we are heading into the fifth year of SLBs versus the 15th for green bonds,” notes Petra Mellor, head of Bank Debt at Nordea Bank. “True, we have some structural aspects still to be fine-tuned for SLBs, but the market relevance is more important than ever.”

Among other trends to watch for in 2024, Vulturius cites decarbonization, blended products, and a strong pickup in North American green bond activity, especially as the IRA’s impact begins to kick in. The US presidential election in November could derail progress, but that is more a topic for 2025, he argues.

And the longer term?

It can be difficult to factor big-issue political discussions—like the recent COP28 meeting—into short-term decision-making, Mellor observes, “but one key takeaway [from COP28] was the increased recognition of transition finance” as an important financial category. That isn’t going away, she says.

Which is another reason to expect that institutions focusing on sustainable finance in its various forms will be have plenty to keep them busy in 2024. With that in mind, Global Finance here presents its fourth annual Sustainable Finance Awards, the winners spanning seven regions and 53 countries, territories and districts, as well as global honorees in 13 categories.      —Andrew Singer

Global and regional awards require submissions detailing hard measures of ESG activity, such as year-over-year growth in sustainable finance transactions or sustainable financial instruments as a percent of total portfolio, as well as softer metrics that include goal alignment with leading ESG norms or innovative product development. Entries were not required for country awards, which were judged by the editorial team’s independent research. Evaluation criteria for both cases include governance policies and goals, achievements in environmental and social sustainability financing, industry leadership and third-party assessments. This awards program covers the activities from January 2023 to December 2023. There was no fee to enter.

Societe Generale (SocGen) bolstered its reputation for sustainable finance innovation in November by serving as sole manager for the first digital green bond issued on a public blockchain and by SocGen. The €10 million senior preferred unsecured bond was tokenized and directly registered by SG-Forge on the Ethereum public blockchain. Blockchain, says SocGen, can potentially increase the traceability and transparency of ESG-related bonds for both issuers and investors.

SocGen also stands out for its reach and versatility. Last year, it was active in ESG projects on all six inhabited continents, including many parts of Africa, and it remains one of the few commercial banks that has ever issued green, social and sustainable bonds, according to Natixis.

 In the project finance sphere, the bank was active on many fronts in 2023, including in October as sole debt financial adviser and mandated lead arranger on Automotive Energy Supply Corporation’s €873 million battery storage factory in France’s Battery Valley. Elsewhere, it helped finance offshore wind projects in Poland and South Korea; onshore renewables in Japan, Australia, Egypt, and Vietnam; and critical materials projects in Mongolia and Africa.           —Andrew Singer

Since Scotiabank announced a goal of mobilizing C$350 billion by 2030 to reduce the impact of climate change, it has chalked up a series of groundbreaking transactions in Latin America’s emerging markets. Notably, the bank supported Inversiones CMPC as it brought the first green sustainability-linked bond issue in the Americas to market in June. The C$500 million in bond proceeds are allocated to designated green projects, and the coupon increases if emission targets are not met.

Also in June, Scotiabank assisted Chile on a sequence of US dollar- and euro-denominated debt issues that are helping the country meet its environmental and social objectives. The deal makes Chile the first sovereign to issue a sustainability-linked bond with a social KPI related to gender diversity.

The bank also supported Mexico’s Trust Fund for Rural Development (FIRA) in April when it placed Latin America’s first green resilience bond on the Mexican Stock Exchange. The US$154.89 million offering is intended to improve the resilience of producers and value chains in the agriculture sector. Proceeds are financing projects to reduce the impact of extreme climate events and strengthen systems against climate stress.          —Andrea Murad

The DBS team helps clients access Asian debt capital markets and raises bond financing for environmental, social and governance-related efforts on the continent. In February 2023, DBS Securities China issued a three-year, AAA-rated onshore panda bond for China Power International; funds were to be used for the development of green power projects. In September, DBS acted as joint lead manager and joint bookrunner on a $650 million, five-year social bond for Hong Kong Mortgage Corporation, the proceeds earmarked to help the company alleviate the financial burden on small to midsize local businesses affected by the Covid-19 pandemic. In 2023, the bank served as joint lead underwriter for the Asian Infrastructure Investment Bank’s ¥1.5 billion, five-year Chinese bond issue aimed at funding sustainable economic development, wealth creation, and improved infrastructure connectivity in Asia.           —Laura Spinale

Industrial Bank of Korea is at the forefront of South Korean’s sustainability field, having launched the nation’s first ESG-related loans in 2022. Offerings have included a KR₩200 billion fund for the RE100, a global initiative encouraging businesses to convert to100% renewable energy. The fund is to provide loans to energy providers that, in turn, will supply renewable energy to companies pursuing RE100-compliant strategies. In partnership with DS Asset Management, Industrial Bank of Korea also created an ESG fund totaling KR₩100 billion to support SMEs and other companies engaged in renewable energy production, eco-friendly power generation, and smart farm development. These and other initiatives boosted the bank’s sustainability financing engagement 15% from 2022 to 2023, to KR₩718.3 billion.           —LS

Canada’s CIBC acted as joint bookrunner on several corporate green and sustainable bond issues last year, including Ontario’s $1.5 billion green bond offering in February, earmarked to support clean transportation and energy efficiency. In November, CIBC was selected by the Canadian government as sole structuring adviser for updates to its Green Bond Framework.

The bank was also bookrunner for Canada’s largest corporate sustainable bond to date in 2023: Hydro-One’s inaugural $1.05 billion issue. Hydro-One will use the proceeds to finance both green and social projects, in keeping with the hybrid nature of sustainable bonds.            —AS

Spain’s CaixaBank takes a multipronged approach to supporting local communities. First, it is Europe’s largest bank provider of microcredits and other loans with a social impact; in the first nine months of 2023, it extended €991 billion of microcredits, an increase of 24% year-over-year.

Second, CaixaBank sustains communities as an issuer of social bonds such as its €1 billion issue last May funding loans to families, self-employed workers and SMEs in Spain. The offering that provides vulnerable people with access to education and healthcare was significantly oversubscribed.

Finally, the bank provides conceptional support, helping to expand the definition of sustainable finance to include deals with individuals and companies, and not just contributions to SDGs, as per its 2023 Guide of Identification of Sustainable Financing.      —AS

OTP’s extensive operations in 12 countries across CEE – Romania, Bulgaria, Croatia, Serbia and Montenegro, and, of course, its home market Hungary— and Uzbekistan and Moldova — have given it access to the growing opportunities for sustainable finance. As well as taking up these opportunities, the OTP Group has led the way in sustainability transparency, standardizing business practices, following a tough anti-corruption policy and prioritizing good corporate governance.

In 2022 the Green Loan Framework was rolled out across the OTP Group to ensure consistency and transparency in the way subsidiary banks manage ESG loans and projects.

Last year saw a further improvement in OTP’s overall ESG Risk Score, and today risk is negligible in business ethics and product governance and low in the areas of data privacy and security, ESG Integration, financials and human capital.   —Justin Keay

Financing for the €4.1 billion Baltic Power project, Poland’s first offshore wind farm, came in last September with the Netherlands’ ING acting as sole sustainability coordinator. The project is expected to supply clean electricity to more than 1.5 million Polish households.

ING’s infrastructure focus does not end in Europe, however. Last year, it closed a KR₩440 billion green loan with Digital Edge to support the first phase of the company’s 100-megawatt data center project in Seoul, South Korea. The Singapore-based firm aims to build sustainable, high-speed digital infrastructure throughout Asia. —AS

Sustainability-linked bonds encountered headwinds in 2023 as questions were raised about both their structure and the credibility of their performance targets, but Finland’s Nordea, an SLB pioneer, insists that they will remain “a key tool for the market.”

In August, Nordea issued a €1 billion sustainability-linked loan bond (SLLB) that employs use-of-proceeds bonds to fund a portfolio of sustainability-linked loans. SLLBs are a potential game changer in the view of some because their structure provides an additional layer of accountability and scrutiny for investors.           —AS

At COP28, the World Bank Group set an ambitious goal to devote 45% of its annual financing to climate by 2025, having committed and mobilized a record $14.4 billion in climate finance in 2023.

The International Finance Corporation (IFC) is scaling up financing to clients through its capital and mobilizing external resources with significant already agreed-upon and implemented measures, and more proposed, to leverage existing resources further while maintaining financial sustainability.

New initiatives include blue-themed bonds to support sustainable ocean economies, a $1.5 billion three-year social bond to help low-income communities in emerging markets and a $3.5 billion credit insurance policy with 13 global insurance companies to support economic activity and foster development in emerging markets.     —GW

The green agenda has been a priority for the African continent for some time, particularly for the private sector. Environmental, social and governance (ESG) initiatives can drive growth in GDP, per capita income and jobs, while fostering collaboration between countries, businesses and communities—and banks are an integral part of this process. Yet, a significant funding gap hinders the continent from achieving the United Nations Sustainable Development Goals (SDGs). While there’s rapid growth in ESG debt instruments, including green, social, sustainability and sustainability-linked bonds, according to Sustainable Fitch, the overall scale of sustainable finance in Africa is still small.

Even so, there are numerous success stories of green ventures in Africa, according to the UN Environment Programme (UNEP). For example, the transition to sustainable agriculture contributes about 17% of sub-Saharan Africa’s GDP and increases productivity while minimizing the impact on ecosystems and helping to reduce food insecurity. The blue economy and ecotourism can generate $576 billion and 127 million jobs over the next 40 years. Renewable energy solutions can contribute 6.4% to GDP over the next 30 years, as Africa has abundant solar, wind, geothermal, hydro, biomass and other natural resources that can be used for innovative solutions.

To meet these needs, the banking sector has continued to provide financial and nonfinancial support, funding projects across the continent. They have also continued to develop innovative products and to revitalize debt capital markets in countries across Africa.

Societe Generale (SocGen) continues to lead in Africa’s sustainable finance. The bank’s successful “Grow with Africa” campaign has continued to contribute to Africa’s sustainable development.

The bank’s infrastructure finance teams support projects to develop wind farms, solar farms and sustainable water and wastewater management projects, and to upgrade hospitals and modernize transport systems. SocGen supports the development of African small and midsize enterprises (SMEs) with expertise, advice and training, as well as an awareness of environmental and social issues.

SocGen strengthened its support in the agriculture sector by facilitating value chains, contributing to a virtuous ecosystem of nonfinancial support to help sector players scale, and by focusing on the blue economy and biodiversity with offerings related to monetizing carbon credits for the maritime sector.

The bank remains dedicated to financial inclusion initiatives and provides access to financial services to populations with limited banking services.

Societe Generale Madagasikara has contributed positively to Madagascar’s sustainable development and supported the country’s ecological transition by working with its customers and communities to follow a more sustainable investment strategy. The bank has changed how it conducts business in several ways, including the “one card equals one tree planted” product launch with the CSR consulting service Bondy, which is focused on reforestation and restoration of biodiversity that ultimately creates jobs. The bank remains committed to education and professional integration, providing funds to help build a better future for youths and structuring projects to build schools and transition some schools to solar energy. Also, the bank financed the rehabilitation of damaged public schools and provided computers.

The Pan-African financial services provider Absa embraces its ethos as an active force for good in its strategy and remains committed to driving tangible, meaningful change in its communities. The bank has worked on several sustainable bond issuances this past year.

Most notably, Absa Group served as joint lead transaction adviser on NMB Bank’s first sustainability-bond issuance, which was a first for Tanzania and East Africa and fostered sustainable finance across borders. The issuance was NMB’s inaugural listing on Tanzania’s Dar es Salaam Stock Exchange. The NMB Jamii Bond’s proceeds are to be used for green initiatives that will enrich the regional environment and finance impactful social projects empowering and uplifting Tanzanian communities socially and economically.

Standard Bank is committed to a strategy for driving sustainable and inclusive growth in Africa based on pillars of social, economic and environmental impact. The bank aims to drive positive impact in line with SDGs to ensure effective ESG-risk management and good practices.

The bank issued 45 billion South African rands (about $2.3 billion) in sustainable financing, including green loans that funded renewable energy projects and green buildings; social loans that delivered affordable housing, basic infrastructure, and essential services in health and education sectors across the continent; and the bank’s first transition finance loan in the thermal coal sector. The bank also participated in sustainability-linked funding across multiple industries that embedded material sustainability key performance indicator (KPI) themes addressing carbon emission reductions and renewable energy consumption, water and waste management, diversity and inclusion and micro- and small-business funding and support.

Standard Bank also mobilized 15.5 billion rands in green project finance and 1.2 billion in social project finance funding renewable energy, carbon projects, basic infrastructure and affordable housing in numerous African countries. These projects include assisting African power producer Red Rocket in developing, designing, constructing and operating wind farms with a combined installed capacity of 280 megawatts (MW) in the Western Cape and 84 MW in the Eastern Cape.

Based in Egypt, CIB (Commercial International Bank) drives change within African emerging markets through pioneering initiatives. The bank recently launched “Brain Trust,” an innovative model that addresses the gap in finance for adaptation projects and mobilizes private investments for pipeline projects in Africa’s agriculture, food and water systems.

CIB also expanded its sustainable finance offerings in 12 corporate and SME financing areas. These include energy efficiency, renewable energy, green building, waste and water management, water desalination, energy management systems, pollution prevention and control, and sustainable agriculture and transport. CIB’s expanded climate finance offerings enable the transition toward a low-carbon economy by addressing the environmental challenges carbon-intensive industries face.

Based in South Africa, Nedbank is a pioneer in green finance, being the first bank in the country to embrace many climate-related initiatives. The bank launched its Green Private Power Tier 2 Bond, with a notional value of 2.1 billion rands, in 2023. This on-balance-sheet transaction was used to finance a portfolio of private renewable power-generation projects in South Africa, including photovoltaic solar and wind projects. These projects help advance South Africa’s renewable energy capacity and accelerate the transition to a low-carbon economy. Nedbank also structured, arranged and invested in a 550 million-rand green bond facility for Burstone Group to finance and refinance a portfolio of green buildings.

IFC (International Finance Corporation) has a vision to create a world free of poverty on a livable planet. As such, it has been a leader in social bonds and sustainable finance in Africa. IFC provided an anchor investment in the West African Economic and Monetary Union’s first social bond in the energy sector that supports the Electricity for All Program (PEPT), a government-led program facilitating access to electricity for underserved populations in electrified localities. Bond proceeds help finance the connection of up to 800,000 low-income households to the national grid over the next four years. 

The strategy of Rand Merchant Bank (RMB) embraces the sound management of natural resources, a cornerstone of sustainable social and economic development.

The bank participated in financing the Development Bank of Rwanda’s inaugural sustainability-linked bond (SLB). This SLB was the first globally issued by a national development bank and the first issued in East Africa. The issuance was structured to recognize the systemic change required for a development bank to meet its sustainability performance targets (SPTs) and to revitalize Rwanda’s debt capital markets.

RMB also established a sustainability-linked financing framework (SLFF) with chemical manufacturer AECI, designed to facilitate SLB and sustainability-linked loan (SLL) issuances. When opportunities arise, the SLFF more broadly overlays KPIs and SPTs on other financial instruments and services. AECI successfully used this framework to debut its 1 billion rand SLB with KPIs focused on effluent discharge, carbon emissions, and gender diversity.  —Andrea Murad

There is no denying that Asia has pollution problems. According to UNEP, roughly 6.5 million people die each year from exposure to poor air quality, and 70% of them live in the Asia-Pacific region. Water pollution and industrial waste also plague the region. However, thanks in no small part to the financing efforts of the following banks, there is hope. Funding for sustainable development projects, clean public transportation, offshore wind farms and other renewable energy efforts will help improve the local environment. And social financing geared toward supporting small farmers, microbusinesses and women-owned businesses will forge a brighter financial future for those living in a cleaner world.

With operations in Singapore, China, India, Indonesia and Taiwan—and strong efforts in transparency, support for emerging markets, ESG-related loans and bonds, and transition/sustainability-linked loans in those markets—DBS takes Asia’s regional award for the Best Bank for Sustainable Finance. Consider its operations in China as one example of its strength on the continent. By the end of 2023’s third quarter, the green loan balance in that country had increased 37% from the balance held in January of that year.

DBS touts itself as the bookrunner of choice for bond issues in Asia and a pioneer bank for ESG capital instruments. Notable ESG activities include working with the People’s Bank of China. This relationship enables DBS China to offer low-cost loans to fund sustainable development projects—including clean energy projects and projects geared toward reducing carbon emissions. Notable financing includes a 572.2 million Chinese yuan (about $79.5 million) green loan to Weifang Bohai Bay Photovoltaic Technology and Weifang Tianen Binhai New Energy to support a photovoltaic power plant project. The loan was issued in November.

Reporting on sustainability since 2015, DBS published its first stand-alone sustainability report in 2018. These reports are produced in accordance with Global Reporting Initiative standards. In 2021, the bank became the first bank in Singapore—and among the first 100 banks globally—to become a signatory to the Net-Zero Banking Alliance. In 2022, it outlined its progress toward the alliance’s goals in a report called Our Path to Net Zero: Supporting Asia’s Transition to a Low-Carbon Economy. That report describes in great detail how the bank selected decarbonization activities, and the science behind those decisions. Goals are set for 2050, with interim goals listed for 2030. The bank has also produced green credit guidelines, a sustainable- and transition-finance framework, responsible business-practice pillars, and community impact analyses—all available for public perusal. For all these activities, DBS earned our award as the Best Bank for Sustainability Transparency in Asia-Pacific.

Additionally, the bank has won our award as Best Bank for Sustainable Financing in Emerging Markets in Asia-Pacific, with strong work in China, India, Indonesia, Singapore, and Taiwan. As a leader in Asian emerging and local currency bond markets, it has funded various sustainability-related projects. DBS China completed the drawdown of a $297 million term loan for China Three Gorges’ acquisition of Alcazar Energy Partners’ solar and wind projects located in Jordan and Egypt, with a total capacity of 411 MW. DBS also partners with clients to facilitate Asia’s transition to clean energy as part of its effort to reduce and eventually eliminate coal-fired power. It has developed a climate analytics tool for net-zero banking, examining, at a portfolio level, the bank’s goals for existing and new customers in the power, oil, gas, real estate, steel and aviation sectors. It works with partners to decarbonize Asian supply chains for its clients, and it provides loans to accelerate decarbonization.

By providing sustainable financial solutions tailor-made for microbusinesses, farmers, fishermen and other traditionally unbanked citizens, BPI (Bank of the Philippine Islands) is doing much to help develop sustaining communities in that nation. One example of these solutions is the JFC Agri Loan Financing Program. This financing mechanism is specifically designed for small-scale farmers—particularly farmers who act as suppliers to BPI corporate client Jollibee Foods Corporation. This financing facility gives small farmers (working on average plot sizes of less than 1.5 acres) access to affordable financing in a region known for very high interest rates on microloans. Microfinance solutions are only one arm of BPI’s ESG work. 53% of its total loan portfolio supports the UN SDGs.

The Bank of China (BOC) won as Best Bank for Sustainable Infrastructure Finance in Asia-Pacific for its work on the nation’s first marine-ecology-oriented development project, the Dongtou Bays • Sea Garden project. The goal of this four-year project is to create needed environmental infrastructure. It also seeks to solve ecological maladies, such as the accumulation of sea garbage in the bay. The BOC funded the project via underwriting bonds for it, along with other infrastructure finance in Asia linked to carbon-emissions reduction.

The bank’s second win, as Best Bank for Sustainable Bonds in Asia, is due to its funding of a broad range of sustainable project categories across the globe. Projects funded promote renewable energy and green buildings and strive to prevent pollution.

These bonds are part of the $1.9 billion in green and sustainable bonds the BOC has floated in overseas markets and 30 billion yuan in sustainable and green bonds in China. The bank has also underwritten 286.2 billion yuan in domestic green bonds and sustainable bonds and $24.8 billion in green and sustainable bonds overseas.

Meanwhile, the bank also prides itself on an abundant and diversified portfolio of green products and services marketed under the BOC Green+ global brand. Among the dozens of loans, trade finance products, services, and deposit products offered are bonds linked to transition and sustainability. These cover efforts in clean transportation, renewable energy, green buildings, pollution prevention and control, and sustainable wastewater management. Recent offerings fund efforts to reduce carbon emissions by constructing new wind power facilities. Additional projects funded seek to improve the management of marine environments, earning BOC the Best Bank for Transition/Sustainability-Linked Bonds in Asia-Pacific award.

CTBC acted as the mandated lead arranger and bookrunner for the Hai Long offshore wind project, the largest such project—in terms of capacity and cost—in Taiwan. It will generate an estimated 1,022 MW of clean power. CTBC has also supported other similar projects, providing financing for 605 MW and 300 Mw offshore wind developments. The bank further acted as a structuring bank for a 17 MW waste-to-energy incinerator built by Cleanaway Energy. This incinerator is dedicated to processing solid recovered fuel. Once processed, this high yield recovered fuel will be used for power generation rather than being disposed of in a landfill. For these and other activities, CTBC has been named Asia-Pacific’s Best Bank for Sustainable Project Finance.

In 2023, the Thai ESG-bond market had an estimated value of 44.9 billion Thai baht (about $1.25 billion). Nearly 28.4 billion of that—63% of the total Thai ESG-bond market—was underwritten by Bangkok Bank. Among projects financed by these bonds was the Xayaburi Power Company’s 3.5 billion baht green bond to design, develop, construct and operate a hydroelectric power plant. Bangkok Bank also underwrote a 3.9 billion baht bond for Energy Absolute Public Company to modernize its buses—supplanting the current internal-combustion buses used for public transport in Bangkok with clean-running e-buses. Additional projects funded include biomass facilities, hydropower projects, solar power facilities and offshore wind power projects.

The Industrial Bank of Korea says it was responsible for 81% of the ESG bonds issued in South Korea in 2023, totaling 6.9 trillion South Korean won (about $5.2 billion). The bank continues to promote the acquisition, trading and issuance of ESG and social bonds. Many of its bonds, indirectly guaranteed by the South Korean government, support small and midsize industries. It has been involved in successful social bonds with organizations such as the Korea Credit Guarantee Fund, the Small and Medium Business Corporation, and the Korea Housing Finance Corporation. In late 2023, the bank issued a $600 million five-year gender-equality- themed social bond. Proceeds will be used to finance or refinance new or existing loans to SMEs and projects supporting gender equality. In further ESG efforts, the bank’s insurance arm invests in green bonds and other eco-friendly projects to promote the expansion of ESG finance and to support carbon neutrality.

The bank also launched that nation’s first ESG-related loans. It established a 200 billion won fund to finance renewable energy providers that, in turn, supply renewable energy to companies seeking to be powered entirely by renewable energy. This has earned it our Best Bank for ESG-Related Loans in Asia-Pacific award. (For more information on this and other initiatives, see the Industrial Bank of Korea’s entry in our Global Winners section.)

ING takes the regional award for Transition/Sustainability-Linked Loans for several efforts. These include its position as sole sustainability coordinator on Southeast Asia’s first private equity backed, leveraged SLL. This $790 million deal supports the activities of the Goodpack company. Based in Singapore, Goodpack is the world’s largest provider of reusable pallet-sized metal containers for road, rail and sea shipments. The funds will support Goodpack’s efforts to implement circular supply chains, or supply chains that reuse materials and goods as long as possible. A second, $403.8 million loan issued by ING supports a company called EdgeConneX in its efforts to build more environmentally sensitive data centers. —Laura Spinale

If 2023 was notable for anything, it was the growing awareness of the urgent need to tackle global climate change. This was compounded by the year becoming the hottest ever recorded, with weather events once considered freaky now increasingly commonplace in many countries, including those across Central and Eastern Europe (CEE). The region’s banks have put themselves at the forefront of this new awareness, operating more sustainably but also looking to take advantage of what will be major commercial opportunities going forward.

Last year, our Sustainable Finance Awards reported that CEE’s banks have moved away from greenwashing. This trend has become more pronounced, with institutions demonstrating awareness of the UN’s 17 SDGs and the Paris Agreement climate goals, and how the banks can meaningfully play their part in creating a greener future. Increasingly, banks are not just identifying opportunities but are working with clients to help them shift toward greater sustainability, which will be vital in driving the whole process forward over the long term.

Established 95 years ago and Poland’s second-largest bank, with around $9 billion of Tier 1 capital, Bank Pekao has long been committed to sustainable finance, which forms the cornerstone of its 2021-2024 business strategy: Responsible Bank, Modern Banking. It is dedicated to reducing the financing of energy-intensive projects, has its ESG strategy closely monitored by an ESG council, and has been making steady progress toward its goal—outlined in its business strategy—of financing 30 billion Polish zloty (about $7.6 billion) of sustainable projects by the end of 2024. (As of the third quarter of 2023 it had reached 22 billion zloty.) Green financing now accounts for 6.6% of all projects, actually above the aim of 4%, while some 30 different initiatives are underway to meet the above sustainable finance goal.

Bank Pekao has pursued a dynamic green bond and SLB issuance program. Through 2023, it was involved in leading, coordinating, financing and/or co-financing at least eight major projects, including a 3.9 billion zloty 1.2-gigawatt offshore wind farm, a 3.5 billion zloty green bond issue for a leading CEE media company, a 0.5 billion zloty contribution toward a new public-private financed tram line in Krakow. The bank also co-organized a 180 million zloty green bond issue for an international property group.

In the wake of the devastating earthquake on February 6 last year that struck Antakya and 11 towns in the surrounding region, Isbank secured $915 million from the Turkey: Disaster Response Framework of the European Bank of Reconstruction and Development (EBRD) to target recovery. It has financed and supported female entrepreneurs through numerous projects, including WeLead, which reached 3,500 women last year. It has also worked as part of a consortium to help refinance $574 million in renewable energy power plants. It has provided green loans to two companies to produce electric/hybrid tugboats.

Hungary’s largest bank, with an extensive network of branches across Hungary and 12 other CEE countries, OTP Bank has long put sustainability at the heart of its business model. By the end of 2023, it had reached 230 billion Hungarian forints (about $642.4 million) in green loans (both corporate and retail), laying out its policies clearly through careful internal monitoring and through its ESG Exclusion List, which has been incorporated into its green loan framework to ensure that no investment takes place in any of the prohibited sectors.

The OTP Group has led the industry in sustainable project finance through its network of operations across CEE. In Romania, together with OTP Hungary, OTP Bank Romania participated in numerous syndicated loans to support sustainable real estate developments in Romania. The total exposure for these projects amounted to €115 million (about $124.9 million) by the end of 2022. OTP financed wind and solar energy production projects by more than €55 million, targeting a new generation capacity of over 1,250 MW from renewable sources.

The bank’s unique reach across CEE—in countries such as Romania, Bulgaria, Croatia, Serbia and Montenegro—has given it access to growing opportunities for sustainable finance, with standardization of business practices and products encouraging the growth of sustainable financing in these countries. By the end of the third quarter of 2023, the OTP Group reported 403 billion forints in sustainable financing business across the region.

OTP Bank’s ESG-related loans have been on a rising trend over the past few years. Sustainalytics judges that OTP’s overall ESG risk score improved from 17.8 to 14.6, putting it into the low-risk category, with risk negligible in business ethics and product governance, and low in the areas of data privacy and security, ESG integration, financials and human capital.

One of Turkey’s largest banks, Akbank provided loan support to the Turkish economy of 1.2 trillion Turkish lira (about $38.5 billion) over 2023, with a strong focus on sustainable investment. It has provided 174 billion lira in 2023 to support a sustainable future, reaching 87% of the 2030 target of 200 billion lira in sustainable loan financing.

The bank has been very active in social bonds and transition-linked loans, increasing issue volume by about 100% for the year as of the end of 2023’s third quarter. Social loans over the first three quarters of 2023 increased 34 times over 2022, with a large proportion of this assisting the areas affected by February’s earthquake. Separately, Akbank contributed 650 million lira to help redevelop these areas and a further 10 billion lira in support to its customers in the area. An agreement signed with the EBRD secured a loan agreement of $90 million to be distributed in the region.

Akbank has also launched Turkey’s first sustainable deposit product, aimed at commercial customers, to enable them to contribute actively to projects aligned with the UN’s SDGs. The bank has supported SMEs through its SME Eco Transformation Package in collaboration with IGE (a company facilitating exports through guaranteed practices for companies) and by launching the IGE-Akbank Green Transformation Guarantee Support Package in 2023, explicitly aimed at helping SMEs to reduce their carbon footprint and lower their energy costs.

As the second-largest bank in Austria, Raiffeisen Bank International (RBI) has expanded into 13 CEE markets and had total assets of €198 billion at the end of 2023. Amid a corporate strategy to “make sustainability happen,” RBI plays a leading role in sustainable bonds, for which it was the fourth-largest issuer in CEE in the first three quarters of 2023, according to Bloomberg data. Sustainable bonds come in several formats (linking with ESG ratings or sustainability targets or linking through proof of sustainable use of funds), and RBI included two corporate bonds (ESG volume of €755 million and ESG volume share of 17%) and seven bonds issued by sovereigns or financial institutions (ESG volume of €2.6 billion and an ESG volume share of 7%).

The Development and Investment Bank of Turkey was founded by the Turkish state in 1975 and was committed to environmentalism long before it became widespread. Its share of SDG-related loans has reached over 90% of its portfolio, while the share of climate and energy SDG loans is now 60%. The bank’s loans have had a marked impact on reducing Turkey’s carbon footprint—the bank has financed 388 projects, accounting for over 15% of the country’s installed renewable energy projects, while it has helped fund 156 projects aimed at boosting renewable energy, cleaning wastewater and reducing industrial emissions.   —Justin Keay

Over the past few years, most Latin American countries have updated their nationally determined reductions of greenhouse gases under the Paris Climate Agreement, with some joining the High Ambition Coalition’s 30×30 initiative to protect the world’s terrestrial and marine areas. Achieving net-zero by 2050 will push Latin American spending to about $20 trillion, with annual spending on physical assets increasing by about $700 billion, according to McKinsey & Company. Because of their geographies, natural resources and economies, Brazil and Mexico account for over half the investing needs in this region.

Latin American banks are vital to this transition to a more sustainable economy, as they have been integral in developing and financing innovative sustainable debt. According to Sustainable Fitch, debt financings from this region have diverged from global trends in that they’re more focused on social objectives. The region has also seen an increase in unique financial instruments, like SLBs, that have KPIs linked to gender diversity and are issued by sovereign nations.

There’s a strong focus on developing infrastructure for underserved communities in Latin America. Banks have financed significant deals in the region that provided, for example, sanitation and water services and renewable energy. Sustainable debt instruments also fund forest conservation and initiatives to preserve the environment, as agriculture is a top industry in this part of the world.

Based in Brazil, BTG Pactual incorporates ESG criteria into its decision-making processes to understand the risks and opportunities of each new relationship as it relates to the environment, society and climate. The bank is committed to assisting clients in their transition to a sustainable low-carbon economy. To date, it has exceeded over 74 billion Brazilian reais (about $14.9 billion) in ESG-labeled issuances, reaching its CFO Taskforce goal two years ahead of schedule.

The bank has participated in notable financings to promote its ESG goals. BTG Pactual contributed to sanitation programs in Brazil with sustainable, blue, and sustainability-linked bonds in local and offshore markets. The bank worked with mega-operations of water and sanitation firms Aegea and Iguá, and contributed about 15 billion reais in ESG bonds for sanitation—with over 10.6 billion reais having a blue label. As the bank was one of the first to issue blue bonds, it has consulted with companies to help them develop a blue framework or structure blue bonds, contributing to expanding private company funding and disseminating the blue label in local markets. BTG Pactual also contributed to Aegea’s issuance of a sustainable and sustainability-linked bond with KPIs related to social and environmental issues.

Banco do Brasil’s long-term commitment is to assist its clients in their transition to a more sustainable economy. The bank has provided transparency through its ESG Databook and quarterly Management Discussion and Analysis reports during this process. These detail Banco do Brasil’s activities and finances regarding its sustainable financing activities. The bank has also maintained top ratings from MSCI and Sustainalytics and has had external reviews from consultancies regarding its sustainable credit portfolio and sustainable finance framework. Banco do Brasil recently approved its proposals and corresponding action plan. The bank’s policies covering environmental, social and climate issues are included in business and administrative practices.

Itaú BBA is committed to sustainable development in the countries where it operates, and this commitment is part of its activities and strategy combining environmental, social and climate aspects. The bank worked with sanitation firm Aegea to finance the Águas do Rio 1 and 4 projects to strengthen water and sanitation services. This is the largest infrastructure debenture and ESG-labeled transaction in the Brazilian market, with 5.5 billion reais raised in sustainable and blue debentures. The project will benefit 27 municipalities and 124 neighborhoods in Rio de Janeiro by achieving 99% water coverage by 2032, 90% sewage coverage by 2033, and reducing water losses to 25% by 2033.

Based in Brazil, Bradesco BBI has achieved at least 86% of its goal of mobilizing 250 billion reais in sustainable finance by 2025. The bank also set goals for net-zero first-round commitments for the coal, electricity generation, agriculture and food sectors.

The bank participated in Eletrobras’ largest issuance, a seven billion reais sustainable debenture that funds renewable energies, transmission lines, green hydrogen, access to renewable energy for populations in isolated areas, forest conservation, and access to education for underprivileged populations.

Bradesco BBI helped to finance Cogna Educação’s 500 million reais social bond. A first of its kind in the Brazilian market, bond proceeds provided educational resources to socially vulnerable municipalities.

The bank was also the bookrunner and ESG coordinator of Comerc Energia’s 1 billion reais green debenture, the company’s first green debenture for renewable energy, energy efficiency, efficient lighting and green hydrogen. Bradesco BBI helped define initiatives and environmental benefits derived from this transaction, and these are included in a framework encompassing Comerc Energia’s future issuances.

Bradesco BBI served as bookrunner and ESG coordinator of 5.5 billion reais Águas do Rio 1 and 4 sustainability and blue debentures that fund water and sanitation services provided by Aegea. This issuance is one of the largest in the local market.

BBVA’s strategy is focused on increasing growth through sustainability, achieving neutrality of green gas emissions, and promoting integrity within stakeholder relationships. Green bonds have become a core part of the bank’s strategy as it helps its clients transition toward a sustainable future. According to Bloomberg, BBVA was ranked the most active bookrunner in Mexico in 2023 for sustainable bonds.

The bank served as joint bookrunner for Colombia’s inaugural social bond with a $2.5 billion notional amount. This bond is the country’s first ESG-labeled offering in international capital markets and leverages the republic’s green, social and sustainable sovereign bond framework.

Based in the Americas, Scotiabank has been working to advance climate transition and promote sustainable economic growth. In 2023, the bank underwrote 7.7 billion Canadian dollars (about $5.7 billion) in green loans and CA$4.7 billion in SLLs. Scotiabank was the sustainability structuring agent on Empresa de Telecomunicaciones de Bogotá’s SLL. The structure encourages replacing copper wiring with fiber optics in the metropolitan area of Bogotá and developing equity strategies by training women in issues related to information and communications technologies.          —AM

As a region, the Middle East highlights the tension between financing fossil fuels and achieving genuine sustainability.

The economies of many Middle Eastern nations, including the UAE, heavily rely on fossil fuel revenue. Banks play a crucial role in financing these industries, which directly contradicts the environmental pillar of sustainability.

A complete withdrawal from fossil fuels would be economically and socially disruptive in the Middle East and the global markets where it sells oil and gas, so the region’s banks are establishing a more transitional role, facilitating a gradual and managed transition towards cleaner energy sources, while still supporting current economic realities.

Green financing is increasing, with the region’s biggest banks actively increasing their investments in renewable energy and sustainable projects. In addition to adapting and transitioning their portfolios to keep pace with global and local ESG regulations, they are also taking steps to provide greater transparency and accountability by measuring and publicly disclosing the environmental impact of banks’ investments. Looking forward, banks in the Middle East are well-placed to help finance the global transition trend.

On its third iteration of its Sustainable Finance and Product Framework, QNB Group has developed a clear road map for integrating sustainability into its business practices and offerings. Green finance solutions include dedicated green, social (including SME financing), and sustainability-linked financing. Having issued the first green bond issued by a bank in Qatar in 2020, QNB executed the first interbank green deposit in the local market, completed green deposit placements with a large sovereign wealth fund, and in 2023, issued the first corporate green guarantee for renewable energy.

QNB’s eligible green loan portfolio in the geographies with established sustainable financing targets saw an increase of over 45% between December 2022 and November 2023, while QNB Group’s total sustainable financing portfolio of $8.5 billion is about 4% of the group’s total loan book.

A loan agreement with the EBRD will provide disaster relief in Turkey via QNB’s Turkish subsidiary, QNB Finansbank. A strong partnership with the EBRD since 2015 has resulted in more than $750 million of agreements. In March 2023, Egyptian subsidiary QNB Alahli launched the first green retail-financing program in cooperation with the EBRD to invest in green projects in Egypt.

Arab Bank has established a sustainability department responsible for systematically managing the goals and programs to improve the bank’s economic, social and environmental impacts. At the same time, a formal Sustainable Finance Framework outlines five focus areas: responsible financing, employee empowerment, transparent reporting, system optimization and community cooperation. Arab Bank actively invests in local communities through various programs, supporting education, health care and environmental initiatives.

The bank’s community investments totaled $20 million in 2022, with the Abdul Hameed Shoman Foundation and Arab Bank’s Corporate Social Responsibility program, “Together,” leading the charge. Arab Bank also offers a range of products including green loans, social impact bonds and climate-focused investments—helping clients meet sustainability goals.

Boursa Kuwait has a corporate sustainability strategy outlining its goals and initiatives across ESG’s three pillars: environmental, social and governance. It publishes annual Sustainability Reports detailing progress and performance on ESG metrics. Boursa Kuwait also offers a guide to help market participants integrate ESG reporting into their operations and provides workshops to advocate corporate and capital markets sustainability.

Eco-friendly practices within its office operations to reduce energy and water consumption while minimizing waste culminated in Boursa Kuwait being awarded a LEED (Leadership in Energy and Environmental Design) Gold certification by the Green Building Council in 2023. While admitting it has limited environmental impact as a stock exchange, the complete renovation of its main trading hall to include greener state-of-the-art technologies sends a powerful message to the entire region.

In line with the Kingdom of Saudi Arabia’s Vision 2030 to diversify the economy away from oil, SAB (Saudi Awwal Bank) is committed to achieving sustainable financing and investments of 34 billion Saudi riyals (about $9 billion). To this end, SAB is the lead arranger for the 14 billion riyal financing raised to support the Red Sea Project, which prioritizes renewable energy and regenerative tourism and played a significant role in the inaugural green bond issuance of the kingdom’s Public Investment Fund.

As of December 2023, SAB has allocated around $3 billion toward sustainable finance projects, while SAB doubled its funded assets toward sustainable finance year-on-year. Financed projects include the $8.5 billion NEOM Green Hydrogen Company—the world’s largest green hydrogen production facility—which will play a crucial role in producing clean energy.

First Abu Dhabi Bank (FAB) is the first bank in the Middle East and North Africa to target net-zero emissions by 2050, addressing the bank’s operations to supporting clients’ transitions. Committed to providing $135 billion in sustainable and transition financing by 2030, FAB is on target to achieve this. In 2022, FAB facilitated in excess of $23.6 billion of sustainable finance: $9.5 billion in SLLs and $10.6 billion in green and social loans. FAB’s Green Bond & Private Placement accounted for 17% of all FAB Bond & Private Placement in 2023, and 12% in 2021, with an annual increase of 42%.

FAB issued a $600 million five-year green bond last year and a three-year $353.9 million sukuk to fund green and social projects.

As the principal banking partner of COP28, the NBD Group, including Emirates NBD Capital (EmCap), pledged to mobilize more than 100 billion Emirati dirhams (about $27.2 billion) of sustainable finance by 2030. With EmCap’s support, clients mobilized more than $15 billion of sustainable finance in 2023 (67%) in the debt capital markets and 33% via labeled loans. EmCap successfully closed more than 20 green and sustainability bonds in 2023.

In 2023, EmCap ranked first in the Gulf Cooperation Council countries for bond issuances and was the highest-ranked regional bank in international sukuk. In 2024, EmCap hopes to take a global role in advising on labeled bonds and loans and structuring sustainability-linked tools. EmCap also plans to facilitate debt-for-nature swaps—involving developing debt being restructured, along with a promise that some funding is allocated for nature-related projects.

In late 2023, Abu Dhabi Islamic Bank (ADIB) raised $500 million by issuing Shariah-compliant green bonds, oversubscribed 5.2 times; this was the world’s first green dollar-denominated sukuk. ADIB aims to allocate an amount equal to the net proceeds of this issuance to fund green projects to accelerate climate transition. This may include financing or refinancing green projects, as well as financing customers for eligible green projects.

In launching its ESG strategy for the next three years, ADIB aims to take advantage of the overlap between the principles of Shariah law and ESG integration to maximize positive impacts. Financial instruments issued under ADIB’s sustainability framework include green, social and sustainability sukuk.

The number of green loans provided by the National Bank of Kuwait (NBK) increased by 14% in 2023, resulting in an increase of 10% in the total monetary value of green financing. This is in addition to a twofold increase in the number and monetary value of sustainability-linked facilities extended in 2023.

The total monetary value of social financing increased by 7% in 2023. Green mortgages to SLLs also increased in developed markets, including the US, France and Singapore. NBK has been expanding its retail business to offer consumers innovative financing solutions to adopt sustainable behaviors and lifestyles by providing electric vehicles and eco-friendly home loans.                        —Gilly Wright

According to SEB Group’s green bonds report, green bond issuance is expected to increase by up to 20% globally this year, and “North America and corporations will be the main drivers of growth in 2024.”

Why North America? Under the administration of US President Joe Biden, the Inflation Reduction Act was signed into law in August 2022, “but it came into force only last year,” Gregor Vulturius, SEB’s lead scientist and adviser on climate and sustainable finance, tells Global Finance. That is, the “shiny new factories” will be showing up only this year and next; and of course, they will need financing.

It’s not as if the region underperformed last year, either. North America was up 80% in 2023 green bond issuance, which was in “a suffering bond market,” Vulturius notes.

Canada’s Scotiabank has an ambitious goal: to mobilize $350 billion to reduce the impacts of climate change by 2030. It reached $130 billion by the fiscal end of 2023, up from $96 billion in 2022—not too bad, given a relatively flat year for sustainable finance globally. ESG bonds accounted for 13.6% of the bank’s overall bond volume, a big jump from only 3% in 2022.

Scotia doesn’t confine itself to North America, either. According to Bloomberg, it was Latin America’s second-leading bookrunner for green, social, sustainable and other labeled bonds in 2023, with a 21% market share. In May, Scotia acted as ESG distributor for the United Mexican States’ Sustainable Sovereign Bond issuance, where demand reached approximately $1 billion.

The bank is active with various impact bonds, including SLBs. It was a sustainability structuring agent for Bell Canada, Canada’s largest communications company, when it added sustainability-linked pricing to its securitization program in September 2023. In June, Scotia also advised the Republic of Chile on its dollar and euro SLB offerings.

Elsewhere, Scotia supported Mexico’s Comisión Federal de Electricidad as joint bookrunner in a June 2023 social bond issuance and played a similar role for Canadian real estate firm Ivanhoe Cambridge for that firm’s inaugural sustainability bond. On the loan side of the ledger, Scotia tallied 67 ESG-loan deals between January 1 and October 31, 2023, with a total volume of CA$7.7 billion.

Finally, Scotiabank has committed to clear, open and detailed sustainability reporting—and once again takes North American honors for transparency. It developed and abided by four transparency principles that guide its net-zero strategy, and the bank regularly publishes its numeric progress toward achieving long-term goals.

Canada’s CIBC figured prominently in sustainable and project infrastructure finance in 2023. In June 2023, the bank co-led a syndicate of underwriters for Northland Power’s CA$500 million fixed-to-fixed-rate green subordinated notes issuance. The power company will use the proceeds for green projects, including an offshore wind farm in Poland and an energy storage project in Ontario, Canada.

CIBC was also the lead arranger and administrative agent for the AES Clean Energy Master Indenture Structure warehouse upsizing. The $2.7 billion refinancing project, which happened in May 2023, included 25 banks and was the largest debt financing for a US renewables transaction.

The bank’s prowess for green and sustainable bond underwriting was already described in the global awards above, but the bank was also a standout in SLLs in 2023. It was Canada’s top bookrunner, with a 25% market share according to Bloomberg, and it acted as sole bookrunner, lead arranger and sustainability structuring agent for $700 million FortisBC Energy’s revolver financing—with a performance target for Scope 3 emissions as well as a social target aimed at protecting Canada’s indigenous population.

Additionally, CIBC was a joint bookrunner for Enbridge’s $900 million sustainability-linked notes, OMERS Realty Corporation’s $600 million green debentures, and Sun Life Financial’s $500 million sustainable subordinated debentures offerings over the past year.           —Andrew Singer

Green bonds dominate sustainable finance, and Western Europe dominates green bonds. The world’s top three banks in green bonds and loans in 2023 were Western European—BNP Paribas, Credit Agricole and HSBC, according to Bloomberg data—while year-end green bond issuance in Europe outclassed its closest regional rival, Asia-Pacific, $243.75 billion to $174.2 billion, according to Climate Bonds Initiative data.

Looking ahead, falling EU interest rates and new standards for green bond issuances bode well for 2024 and beyond. On the punitive side, European banks could encounter new fines and higher capital requirements if they delay implementing green transition plans too long. More European banks, too, are imposing internal restrictions on their fossil-fuel sector financing.

For CaixaBank, sustainable finance is about more than reducing greenhouse gas emissions. It also entails a strong social commitment, such as boosting financial inclusion through its microfinance bank, Europe’s largest; or issuing social bonds, a bond type that some other banks abandoned after the Covid-19 crisis.

Indeed, when CaixaBank closed on its fifth social bond, in May 2023, that €1 billion debt instrument focused on education and health care was oversubscribed by €750 million.

CaixaBank is also a leader on ESG-related loans. It ranked third globally, according to Refinitiv, and was first in Europe in the first half of 2023, providing $11.65 billion in financing through 57 transactions.

The bank also brings some resourcefulness to its deals. As sustainability coordinator for Acciona Energía’s €750 million green financing in November 2023, the bank incorporated a local impact indicator in which participating companies committed to planting 26,000 trees per year (collectively) during the financing’s term.

LGT Group, Liechtenstein’s royal family-owned private banking and asset management group, began to embed sustainability-oriented clauses in its investment programs decades ago. It makes a point of publishing the extent to which its investments meet sustainability criteria.

As of June 30, 2023, the group had invested 54.5 billion Swiss francs (about $62 billion) in sustainable investment solutions globally, representing 36% of LGT’s total assets under management. That was up from 34.8% at year-end 2022. Moreover, 80% of LGT’s discretionary mandates in Europe, the Middle East, Africa and Asia now meet the EU’s Article 8 sustainability requirements, which qualify as “light-green” funds that “promote investments or projects with positive environmental or social qualities, or a combination of such characteristics, as long as the investments are made in enterprises that adhere to sound governance practices.”

The Netherlands’ ING was 12th globally among green bond bookrunners in 2023, according to cbonds.com, and many of those issuances were in Western Europe. In June 2023, for instance, ING acted as sole structurer and joint active bookrunner on Anglian Water’s £860 million (about $1.1 billion) dual-tranche green bond issuance to help meet that water and sewerage company’s capital expenditures.

In infrastructure finance, ING played multiple roles, including sole underwriter and mandated lead arranger, in AtlasEdge’s plans to expand sustainable data centers across Europe. The company raised €525 million in committed debt financing and a further €200 million uncommitted accordion facility. The 2023 sustainability-linked financing includes KPIs to ensure the new data centers use renewable energy.

ING is a veteran of sustainable project finance, too. As sustainability coordinator for Baltic Power’s offshore wind farm project and its €4.1 billion multibank credit facility, for instance, ING helped ensure that financing aligned with the Loan Syndications and Trading Association’s Green Loan Principles and the International Capital Market Association’s Green Bond Principles. Baltic Power will be the world’s first to use low-emission steel produced almost entirely from recycled raw material.

Societe Generale (SocGen) SLBs lost momentum in 2023, but SocGen stayed the course, acting as structuring adviser and joint bookrunner for the Republic of Chile’s €750 million SLB issuance in June. SocGen was also the sole structuring adviser in the UK’s Heathrow Airport €650 million SLB, with its separate performance targets for slashing carbon emissions “in the air” and “on the ground.”

As noted in the Global Winners section, according to Natixis, SocGen is one of the only commercial (i.e., nondevelopmental) banks that has ever issued green, social and sustainable bonds. In September 2023, SocGen was the global coordinator for French real estate development and investment company Praemia Healthcare’s €500 million sustainability bond. Proceeds will finance green and social assets—including medical and eldercare facilities.

SocGen has been a perennial supporter of sustainable finance projects in the emerging world, and 2023 was no different. In Central and West Africa, it partnered with Afrigreen, a debt investment fund, to support the decarbonization of local companies, raising €87.5 million. In contrast, in Kazakhstan, the bank supported the development of green mobility as global coordinator and mandated lead arranger for the €627 million financing of 105 electric locomotives to be used in that Central Asian nation, among other projects.

Finland’s Nordea kept its innovative skills sharp in 2023, introducing its second sustainability-linked loan bond, or SLLB, at the end of August. The €1 billion issuance followed the first-ever SLLB (€370 million) launch in late 2022. This hybrid instrument uses standard use-of-proceeds bonds to fund a portfolio of SLLs, though with no coupon adjustment for investors. The bank absorbs any performance shortfall.

Overall, SLLs at Nordea were up 30% in the first three quarters of 2023 compared to 2022, and the bank ranked top in SLLs in the Nordic region, according to Bloomberg.        —AS

Global Finance: When you switched to a digital-only bank, how did you determine which services you wanted to offer to SME [small and midsize enterprise] clients?

Gabriel Motomura: When we launched, we went to the United States. We went to Eastern and Western Europe. We wanted to see what banks were doing globally to help SMEs. We wanted to know the No. 1 bottleneck that prevented SMEs from growing. And we went back home and started asking around. Almost 100% of the SMEs we spoke to said the bottleneck was access to capital.

The leaders of the SMEs we spoke with said, “I can handle getting more customers in, but we have no access to capital. You guys should start with capital.” So, we started this initiative by focusing on lending. We jumped right in.

GF: Giving SMEs access to the funds needed to grow their businesses was vitally important. What other capabilities did you implement to help SMEs grow?

Rogério Stallone: Normally what we see in dealing with someone who’ll become our client, the owner of an SME, say, an engineer. And he’s spending 95% of his time dealing with cash flow, dealing with the bank. He’d like to spend that time talking with his clients or developing new projects. Our mission is to help to facilitate the life he wants: To give him time to focus on his business, not dealing with bank bureaucracy. We offer our clients the time they need to grow their businesses.

GF: How do you help your SME clients save time?

Motomura: Look at a checking account as an example. At many banks, an SME user goes to his checking account, downloads a statement and imports it to Excel or Google Sheets. We developed a connection for business banking accounts that automatically links the account and the spreadsheet application. It’s done instantly.

Then you might have a company with more than one partner or decision-maker, and they want to know everything about money movement through their checking account. Usually, that would require both of them to access their accounts. We developed an integration where all partners are automatically alerted to every transaction. Say I spend 10,000 Brazilian reais (about $2,000) on building materials; my partner is automatically alerted.

The most positive feedback we get is about our integrations and connections.

GF: What are you doing now to improve your services to SMEs?

Stallone: In Brazil, we see banks with strong balance sheets and an appetite to lend money. Then we have SME clients who are doing a decent job. We also have fintechs creating new products for flexibility and agility. We aim to connect the banking and SME world with the fintech world. For example, we connected with ERP [enterprise resource planning] systems, so clients of those ERPs can transact very easily with them. Working with our bank, the client can instantly export and reconcile accounts payable from its ERP system onto our banking system. There’s no friction; they don’t have to log in and out a lot.

Motomura: We are now connected with more than 30 fintech systems in Brazil. We allow them to build solutions on our infrastructure. Fintech payment systems, for example, have been built on bank infrastructure. We do this because we know that fintechs can offer complementary banking services our SMEs need.

GF: You’re a digital-only bank. Do any of your SME clients say they’d like to be able to walk into a bank and have a face-to-face conversation with their banker?

Motomura: We are a fully digital bank with a human touch. We have real people working 24/7. If you have a problem … no problem. You can use chat. You can video conference with us. You can call us for some advice: weekends, Saturdays, Sundays, the middle of the night. Usually, no client wants to walk into a branch just to talk. They’re too busy. Some clients want to walk into a bank to cash a check but cannot, so they use another bank to do that.         

Motomura: We are a fully digital bank with a human touch. We have real people working 24/7. If you have a problem … no problem. You can use chat. You can video conference with us. You can call us for some advice: weekends, Saturdays, Sundays, the middle of the night. Usually, no client wants to walk into a branch just to talk. They’re too busy. Some clients want to walk into a bank to cash a check but cannot, so they use another bank to do that.          —LS

As the global economy continues to limp along, small and midsize enterprises (SMEs) will keep facing an uphill climb in 2024—whatever corner of the world they happen to occupy. The International Monetary Fund forecasts that GDP growth in emerging and developing economies will fall to 4% in 2023 from 4.1% in 2022 and remain at 4% in 2024, while GDP in advanced economies will drop to 1.5% this year from 2022’s 2.6% and to 1.4% in 2024.

SMEs can expect to face stronger headwinds in a sluggish economy than their larger brethren. Large corporations tend to have balance sheets that can weather the knock-on effects of such challenges as the Russia-Ukraine war, the current Middle East conflict, rising energy prices, tighter monetary policies, and governments’ cessation of pandemic support measures. For SMEs, stingier capital markets and the breakdown of open trade in favor of national self-reliance in many economies are making growth even more difficult.

This does not bode well for the global economy. Approximately 99% of businesses worldwide are SMEs, representing 60% of the business value-add, according to the OECD October 2023 SME and Entrepreneurship Outlook Polixy report. Small and midsize businesses are critical “to drive a resilient, inclusive and sustainable recovery,” the report’s authors warn.

One of the most important lessons the pandemic has taught businesses is the necessity of digitalization: from improving online and mobile access for clients to virtualizing their organization’s infrastructure. Social media and cloud computing have become mainstream for most SMEs, the OECD report’s authors note, with use of the latter doubling in the past six years.

Unlocking the value hidden in the data will be critical. A World Economic Forum survey of 111 SMEs in 42 countries and 21 sectors found that “74% struggle to maximize the value of their company’s data investments.” More than half of those polled (55%) experienced difficulty finding data, and slightly fewer (54%) had difficulty maintaining their data.

“The greatest acceleration in digital diffusion in recent years has been in the conduct of big data analysis—albeit from low levels—and the purchase of cloud computing services,” says Sandrine Kergroach, head of SME and Entrepreneurship Performance, Policies and Mainstreaming at the OECD Centre for Entrepreneurship in a 2021 OECD report. “The adoption of business intelligence and supply chain management software have progressed little, especially among the smallest firms.”

Yet, the development of open banking standards, the sharing of application programming interfaces (APIs), and the rise of the sharing economy have begun to increase the value of SMEs’ internal data. That makes selecting the proper banking partner more critical than ever.

Firms need to balance access to the cheapest capital against the value-add of the technologies and other services banks can provide. This year’s World’s Best SME Bank Awards recognize those financial institutions that stand head and shoulders above their competitors in serving their SME client base.      —Robert Daly

The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the winners of the World’s Best SME Banks 2024 based on a mix of objective and subjective factors. Editors consulted entries submitted by the banks and the results of independent research. Entries were not required.

Judges considered performance from April 1, 2022, to March 31, 2023. Global Finance then applied a proprietary algorithm to shorten the list of contenders and arrive at a numerical score of up to 100. The algorithm weights a range of criteria for relative importance, including knowledge of SME markets and their needs, breadth of products and services, market standing and innovation.

Once the judges narrowed the field, they applied the final criteria, including scope of global coverage, size and experience of staff, customer service, risk management, range of products and services, execution skills and use of technology. In the case of a tie, the judges lean toward local providers rather than global institutions. The panel also tends to favor private-sector banks over government-owned institutions. The winners are those banks and providers that best serve the specialized needs of SMEs.

For the second year running, the Brazilian digital bank BTG Pactual Empresas has swept the Best SME Bank awards for Brazil, Latin America, and the world. The bank has eased access to capital for micro, small, and midsize enterprises (MSMEs), representing approximately 90% of Brazilian companies.

Clients get a low-touch digital channel, available 24/7, that nevertheless provides a high-touch experience using open banking standards and Brazil’s PIX instant payment system. For example, BTG Pactual Empresas has shortened the time needed to obtain credit to about 30 minutes for clients participating in rural credit programs, solar-power and green financing, and women-owned businesses. Newly opened SME accounts are operable within an hour.

Once an SME account is open, account owners can export their banking data to standard spreadsheets, Microsoft Excel and Google Sheets, and enterprise resource planning (ERP) applications, instantly reconciling accounts in their ERP systems.

BTG Pactual Empresas provides such additional services as single-sign-on multiuser and multibusiness accounts, online invoicing, collection management, budgeting capabilities, foreign currency exchange and digital receipts, along with payroll, insurance, and tax and investment services. Clients can reach expert support any time via chat, email, WhatsApp and toll-free calling.       —RD

Rising waters may lift all boats, but they can sink small islands. Many of the nations spread across the vast expanse known as the Asia-Pacific region are particularly vulnerable to typhoons and other impacts of climate change. Years ago, Australia was among the first countries to confront the hole in the ozone layer. Just this past May at the UN Climate Conference in Bangkok, the president of Pulau and the prime minister of the Cook Islands called for more generous financing from wealthy and well-developed nations. Small island nations contribute little to atmospheric carbon and other causes of rapid climate change, yet they are more at risk from the consequences. 

Yet the region is a haven of economic dynamism that burns energy, too. Nations across Asia are grappling to achieve a sustainable balance of growth. Even though coal still accounts for more than half of the country’s electricity generation, China now leads the world in its efforts to transition to sustainable energy sources, with a stated goal to become carbon neutral by 2060. It may seem like a reach for a country whose steel and cement production alone account for more CO2 emissions than that produced in all of the European Union, but China’s investments in renewable energy, sustainable materials and electric transportation spur ESG activities and investments throughout Asia. These include a growing market in green bonds and transition finance products, along with increased investments in products with broader sustainability and social parity themes. 

China is a powerhouse but Asia is well-known for the ingenuity of its smaller dynamos, including Singapore, Taiwan, Thailand and Malaysia. Our awards recognize leaders in delivering financial solutions that promote ESG practices, sustainable transitions and long-term value for stakeholders. 

Bank of China (BOC) takes the Asia-Pacific award for Outstanding Leadership in Sustainable Finance, along with regional awards for sustainable project finance and sustainability bonds. By focusing on topics such as green finance, inclusive finance, rural revitalization, and consumer protection, the bank promoted the integration of ESG concepts into both its own corporate governance and outside business development. Its goal is to create sustainable value for the environment, society, and economy.

In 2022, BOC issued the first green bond based upon the updated Common Ground Taxonomy: Climate Change Mitigation—a joint initiative between the Peoples Bank of China (China’s central bank) and the European Commission, which strives to find common ground between the ESG taxonomies used by China and European countries in developing green finance initiatives, comparing commonalities and differences between the taxonomies used, and mapping them, to enable better international coordination. BOC’s $500 million three-year senior unsecured fixed rate bond based on this taxonomy will be used for projects that help mitigate the effects of climate change.

In other activities, BOC’s London branch contracted and disbursed a syndicated loan for the world’s largest operational offshore wind farm, located in the North Sea. In Beijing, the bank is supporting green building construction on, and ecological protection and restoration of, the 2022 Winter Olympics site.

In addition to publishing sustainability reports and white papers, Maybank in 2022 embarked on a project to guide sustainable finance efforts. Its Sustainable Product Framework clarifies its metrics for green, social, and sustainability-linked financing. Maybank wrote this framework to bolster its thought leadership in the green arena, to demonstrate the bank’s authenticity of commitment, and to avoid even the appearance of greenwashing. The framework outlines the methodology and associated procedures used to classify and report on financial products and services labeled by Maybank as “sustainable.” The framework was developed in partnership with Sustainalytics, an independent ESG and corporate governance research, ratings, and analytics firm. The bank maintains that the criteria set forth in the framework is more exhaustive and stringent than those set forth by many other banks, and in line with marketplace best practices. For this effort, Maybank receives the award for Outstanding Leadership in Sustainability Transparency.

CTBC takes the award for Outstanding Leadership in Sustainable Infrastructure Finance. Three projects are particularly notable. The bank acted as joint financing arranger for the first nonrecourse waste-to-energy (WTE) project financing in Taiwan. The cash funds Taiwan Cube Energy’s 20 MW WTE incinerator, which will process solid recovered fuel into a source of electricity. CTBC also took part in a 3 billion Taiwan new dollar (about $96.6 million) loan to the Yang Bao Enterprise Co. for a WTE project. Yang Bao is building plants in Taiwan to reclaim industrial waste from the electronics industry for use as fuel. Finally, CTBC is acting as mandated lead arranger and bookrunner for the NT$8.9 billion Sunny Rich 130 MW solar aquafarm project, a type of solar project that also encourages aquaculture by creating a more efficient and environmentally friendly way to farm fish.

DBS has won four Global Finance awards for its work in the green arena. It takes the award for Outstanding Sustainable Financing in Emerging Markets for its work to facilitate the transition to clean energy in Asia. For example, it has been named by the Indonesia Investment Authority as financial adviser to the authority’s energy transition program, which seeks to accelerate the shutdown of private sector coal-fired power plants in that nation, concurrently finding innovative ways to provide power in an environmentally friendly manner.

DBS earned awards for use-of-proceeds transition loans and transition-focused sustainability-linked loans totaling 480 million Singapore dollars (about $355 million), and a sustainability-linked bond for 300 million in 2022, used to finance, among other things, investments in low-emission fuels and transitions toward steel production methods that produce fewer greenhouse gases, as well as agriculture, real estate and corporate projects. Its award-winning work in green bonds includes acting as joint bookrunner for an 800 million Singapore dollar bond for Singapore’s Public Utilities Board, used to finance or refinance eligible green public projects. It also took active roles in the issuance of a host of other bonds, including those used for green projects being developed by organizations such as Henan (China) Railway Construction and Investment Group, the Indian Railway Finance Corporation, Towngas Smart Energy Company, and others.

Details on DBS, a global winner, can be found here.

ESG activities are important to Bangkok Bank, and it wins the regional award for loans in this arena. In 2022, it financed 643 million Thai baht (about $18.3 million) in green loans offered as part of a special SME loan program in operation since 2008. Loans issued under this program are to be used for investment in renewable energy projects to reduce greenhouse gases produced by the businesses. These projects may include solar, wind, and hydropower investments. During the year, Bangkok Bank expanded this program by granting special loan rates to SMEs installing solar rooftop power cells. Renewable energy loans issued by the bank in 2022 came to 88.1 billion baht. Renewable energy loans granted by the bank in 2022 helped generate 1,184 MW of solar power and 208 MW of biomass electricity-generating capacity. Also last year, a 17.8 billion baht loan by Bangkok Bank constitutes 28.1% of syndicated loans for the construction of two new electric urban transit train lines to run through the Bangkok metropolitan area.

“Global Finance is a well-respected publication in the world of international finance, known for its in-depth coverage, rigorous analysis, and insightful commentary on the latest trends and developments in the global financial landscape.”

Hey, look! Artificial intelligence works. Consider the paragraph above. It is an AI-generated answer to the question “What is Global Finance magazine?” Certainly, this is simple response to a simple query. But artificial intelligence—loosely defined as computing processes programmed to mimic human thinking and learning—is increasingly being used to solve thorny, near-universal challenges faced by financial institutions.  

Whether trying to help banks penetrate new markets, improve overall operations or better secure data, many of the innovations to emerge in the past year from the notable fintech hubs, labs, incubators and accelerators examined by Global Finance depend on AI. AI is even helping financial institutions navigate the compliance labyrinth. But AI isn’t the only technology driving change: machine learning, blockchain and cloud computing also continue to push the boundaries of what can be accomplished. 

And not all innovations are technological. Our sixth annual review of the World’s Best Financial Innovation Labs, we pull out the trends emerging from these industry-leading innovation centers. This year, there are many new digital tools, of course, but we also found ingenuity in designing new financial products, education and training programs, marketing initiatives and more. 

For our complete listing of the world’s leading innovation labs, click here. 

Improving KYC processes

The anti-money laundering (AML) landscape is constantly evolving. Worldwide, banks are caught in a cycle of new crimes giving birth to new laws leading to ever-more-stringent know-your-customer (KYC) requirements. Several labs have fostered innovations designed to make AML compliance easier.

Based in Zurich and Singapore, Tenity bills itself as a “global innovation ecosystem.” Acting as both an incubator and accelerator, it has thus far secured more than $370 million in funding for roughly 250 corporate alumni. Among these is the Swiss fintech Relio, which has secured €3 million in investments for its AML tech stack. Relio technology automates AML compliance processes, particularly for neobanks. Arduous and ineffective due-diligence processes coupled with the international flow of money left many would-be neobank business customers having to wait too long to open accounts. Often, these same customers had their accounts frozen during mandated periodic AML screenings. Relio has developed an automated compliance system to perform these checks more quickly and precisely.

Similar AML work is being undertaken in a variety of innovation hubs. Deutsche Bank Innovation Center worked with WorkFusion to automate a number of AML processes safely and efficiently, along with onboarding tasks, mortgage processing and other bank operations that otherwise require a tremendous amount of manual work. Among the more than 200 startups accelerated by DIFC Fintech Hive is RegTick, a software platform that contains a regularly updated library of industry regulations and an intuitive interface to help organizations understand, and comply with, regulatory requirements. Meanwhile, Deontic Data, incubated in Accenture’s Fintech Innovation Lab, co-founded by Accenture and the Partnership Fund for New York City, is working with data originators and providers to automate the data supply chain, and secure it in alignment with AML statutes.

Strengthening Data Security

As Deontic Data illustrates, the need for data security aligns with AML compliance. Here, too, innovation labs are on the job.

Founded in 2018, Taiwan’s CTBC Internal Data and AI R&D Center now employs more than 100 people. It has thus far collaborated with 26 bank departments on more than 40 projects. Two significant projects to recently arise from the Center focus on keeping both bank and customer data safe. The first innovation detects suspicious SWIFT messages. SWIFT (Society for Worldwide Interbank Financial Telecommunications) is a massive messaging network used by banks to communicate sensitive information quickly and securely, such as money transfer instructions, international payments and acceptance of credit card payments. Manual review of each message is time-consuming and error prone. CTBC has developed artificial intelligence and natural language processing technologies to develop an automated semantic understanding of SWIFT messages, quickly reading and classifying them. The system automatically identifies suspicious messages for human review—significantly reducing the amount of time bank employees must spend reviewing SWIFT messages.

In the time of Covid-19, when expectations for virtual services ran high and the pandemic restricted some personal movement, the Center developed a “video witness” program for loan applications. The people required to witness corporate loans cannot always visit bank branches. To compensate, the Center developed AI-powered video technology that combines verification capabilities with videoconferencing to serve loan customers from anyplace, while maintaining a level of security similar to that of a face-to-face meeting. Visual AI is used to recognize customer IDs, and machine reading of passports enables bank employees to verify document authenticity. AI then helps bank employees compare these photo IDs to that face of the applicant, ensuring the two match. AI-powered document proofreading technology compares the content of the loan documentation the customer has signed against that offered by the bank, reducing manual comparison time and mitigating the risk of contract terms being tampered with.

Additional security innovations range form improving attack predictions to combining different types of security operations on a single platform.  

Arab Bank Innovation Lab (AB Ihub) recently bowed  a series of four bootcamps across the Middle East. More than 50 startups participated. Top fintechs received cash prizes of up to $45,000, along with an opportunity to conduct a proof of concept or pilot with Arab Bank. Among the startups nurtured in the innovation lab was the San Diego-based SecLytics, an attack-prediction platform that can predict cyberattacks, on average, more than 51 days before they occur with more than 97% accuracy. Arab Bank is using SecLytics’ machine learning algorithms to identify threats targeting Arab Bank’s technology infrastructure. With SecLytics’ information in hand, the bank can block the IP addresses of would-be attackers, along with the IP addresses of their known affiliates.

The CZBank Network Security Innovation Laboratory was officially launched in 2022. An effort to protect CZBank, the laboratory focuses on innovative practices in the fields of network security, defense systems, DevSecOps systems and data security. It has thus far completed 10 security innovation projects. Among them are the data leakage-prevention security system. This project is a unified plan for securing data at every step of its lifecycle — including generation, transmission, storage, application, sharing and destruction. A second project seeks to embed threat intelligence data into the bank’s security operation platform, greatly reducing time to insight and triggering automated response processes as necessary. Finally, Synechron, a New York–based IT and consulting company with fintech acceleration programs around the world, is creating an enterprise governance, risk and compliance platform. The platform will provide unified IT audits, risk management, information security, data management and IT governance capabilities.

Streamlining Bank Operations

The possibility of automating bank operations propels the use of AI and analytics in FIs. And automation opportunities go beyond AML and data security. In fact, at BBVA AI Factory, the processes starts with automating the programming of AI itself. The Factory is creating tools for the reuse of analytical and data templates within the bank.

Imagine you have hardware you want to sort. First, you want separate storage bins for your screws, for your nails, for your nuts and for your bolts. Then you want another set of storage bins where you can keep some screws and nails together, some nuts and bolts together, some nails and nuts together. Oh, and you live in a world in which prefabricated containers don’t exist, so you have to manufacture each one yourself. 

This is a little like how artificial intelligence is programmed. Machine-learning models (the “storage bins”) must be trained to recognize the data they’re studying—or the bits of hardware to be stored. And just because the machine learning model understands what a “nut” is and what a “bolt” is, it doesn’t mean that the model understands a “nut and bolt” combination: the model must be trained again to understand how the two work together. It’s a time-consuming, arduous process.

The Mercury library at BBVA may make life easier for AI engineers working within the bank.  Its goal is to streamline and share the use of AI code components to speed development of AI products. Mercury is 300,000-line open code library for the 700-person AI Factory community; anyone can view, modify and submit changes. The code is modular, enabling users to install only the specific parts of the library they require to complete projects. Data scientists can reuse components as their needs dictate.

Innovations from OTP Bank Innovation Lab, BNY Mellon Enterprise Innovation Group and Copenhagen Fintech Lab also focus on improving bank operations. 

Turning a cost center into a profit center is certainly an improvement in operations. OTP Bank Innovation Lab has nurtured a startup called Ender Turing that strives to do just that.

Ender Turning, based in Estonia, has developed an AI-based platform that analyzes customer service calls, chats and emails. Its platform is able to analyze up to 100% of customer service communications, compared to the 1% to 5% that are typically used in banks’ quality reviews. With a nearly complete overview of all inbound communications, the bank is better able to chart the quality of its customer service and make improvements as needed. The platform can also be used to ensure debt collection processes follow strict legal protocols.

Better yet, Ender Turing’s platform can help banks turn a profit.  

“Usually contact centers are cost centers,” says Ender Turing CEO Olena Iosifova. “People call in for help, and the bank pays customer service representatives’ salaries to provide that help. With our platform, banks can now convert inbound customer service communications into sales. A customer calls with a question, and the goal of every employee is to turn this conversation into a sales process. They can offer great service, then immediately give customers an idea of a new product or service that might benefit them. They can do this because we track customers’ emotions, and their relationships with the bank, to really understand what products or services would benefit them.”

How else can AI help improve bank operations?

AQRisk, a graduate of Copenhagen Fintech Lab, deploys analytics and automation to improve financial industry decision making, increase automation and better utilize resources. Nurtured in Startup Bootcamp, Delega is a treasury management application that allows companies to give banks digital access to all the information needed to create and maintain signatory records. This process enables corporate treasurers to comply with audit requirements more easily. It also speeds the process of banks receiving signatory information and improves the accuracy of signatory records. BNY Mellon Enterprise Innovation Group has worked with Access Fintech, a company offering a collaboration platform to improve work in the financial industry.

Reaching New Markets

In addition to better serving their customers, the point of all this, of course, is to help financial institutions spend less and make more. Another route to improved profitability, as identified by the products nurtured in fintech labs, is expansion into new markets and deeper penetration into old ones. Here too, AI can help.

WeArisma was nurtured by the Morgan Stanley Inclusive Ventures Lab (formerly the Morgan Stanley Multicultural Innovation Lab). The lab strives to nurture companies led by traditionally underrepresented populations, including women and people of color. It has thus far accelerated 69 companies in New York, Europe, the Middle East and Africa. The WeArisma platform provides analytics on influencer interactions with brands and companies to help large financial institutions and others connect to a rising generation of customers. According to founder and CEO Jenny Tsai, the WeArisma platform contains six years of data on the influencer landscape, including information on social media influencers, the press, celebrities and content creators. The WeArisma platform uses this data to understand how influencers promote, discuss or recommend different companies, brands and products. This information can be used by financial institutions to find ways to impact the social media landscape, better targeting marketing spending to connect with a new generation of customers.  

“We help companies answer the questions, “What is our brand value? What is our brand health on social media?” Tsai says. We help them understand that customers no longer go straight to a brand’s web site to get information about the brand. People find out about a company through word of mouth—through influencers we interact with every day on our phones. We’re all in our own bubbles of feeds. Brands need to determine how to penetrate them to earn mind share. Once you know how your brand is perceived, that can inform your communications objectives and help you achieve them.”

WeArisma is just one of a plethora of innovations that strive to help financial institutions find new customers. Late 2021 saw the launch of Reflect, the first neobank in Jordan. It was created by the Arab Bank Innovation Hub. In February, Reflect expanded into Palestine. A fully digital bank, it was designed specifically to attract millennials and Generation Z, consumer groups who expect a full banking experience on their smartphones. The Reflect app’s features enable account holders to transfer funds among registered users, shop an online marketplace and meet personal finance goals. Reflect also provides users with exclusive offers and discounts tailored to the customer’s lifestyle and interest. Recently, the Innovation Hub worked with Dateio, a Czech analytics fintech, to help Reflect understand its customer more deeply in order to better tailor offerings including credit cards and buy now/pay later programs.

Widening Inclusion In African Markets  

Wenov by Attijariwafa Innovation Lab, based in Morocco, supported the creation of more than 100 proofs of concept between 2020 and 2022. It is reaching further into the African market through the establishment of a corporate venture capital fund. Called Positive Invest, it will fund new fintech and insurtech startups on that continent. Investments will run between roughly $200,000 and $4 million per company.

E-doc Online, nurtured by Startup Bootcamp, leverages 120 data points in its credit risk model. These data points give credit decision-makers criteria beyond traditional credit scoring on which to judge an applicant’s creditworthiness. A current E-doc Online project targets Nigerian expatriates. Noting that 17 million Nigerians live outside of their country and often have trouble obtaining financial services in their new countries, E-doc Online acts as a data bridge between non-Nigerian and Nigerian banks, enabling expats to access financial products in Nigeria. 

DIFC Fintech Hive is also making strides in the African market. It has nurtured Brij, a fintech enabling trade across Africa by proving a suite of cross-border payment solutions. These enable   personal and business users to buy, sell, submit invoices and receive payments more easily.

Better Serving Business Customers

Like any corporation, financial institutions are always looking for ways to better serve their customers—including large and small businesses, retail customers and even potential customers yet unbanked.  

Significant AI innovations are being made in the field of improving banking relationships with large businesses. Helping these companies better manage the supply chain seems to be an area of focus. FinTech Innovation Lab has nurtured Ion Channel, a software supply chain management platform that monitors security risks from third-party software suppliers: vendors, application developers, contractors and others. Deloitte Catalyst bowed a digital tracking platform that combines insights from the Internet of Things with business data to support real-time monitoring of asset locations and movements. This helps improve supply chain efficiency and reduce costs while improving inventory forecasting. Among the 86 startups nurtured by Seoul Fintech Lab is SCM Solutions, a fintech that offers easier-than-traditional supply chain financing for ecommerce sellers.

At Bank ABC’s ABC Lab, innovations for larger customers include a digital marketplace portal enabling corporations to better manage finances. The portal offers apps for cash management, supply chain management, trade finance, banking services and industry insight. Additional capabilities include access to third-party systems for enterprise resource planning and HR. The portal also provides users with view of their accounts at both ABC and external banks. AI-powered insights into cash flow and reconciliations provide suggestions for next-best actions.

Smaller businesses need specialized help. Just ask TradeIn, a company recently accelerated by BofA Breakthrough Lab. Founded in 2021, the lab has thus far nurtured 22 startups from the United States, Europe and Latin America. Bank of America does not take an equity stake in the startups; instead, funding is potentially available from the lab’s network of 25 investor partners. The lab does provide access to Bank of America experts and partners and the bank’s technology ecosystem.

TradeIn is an AI-powered SaaS solution that enables SMEs to get instant access to working-capital financing. According to co-founder Jean-Cedric Bekale, bookkeeping processes and cash flow vagaries often make it hard for SMEs to obtain the financing they need. Balance sheets are outdated, SMEs are sometimes unable to forecast cash payments, and a paper-based understanding of customers gives banks limited insight into SME creditworthiness. The TradeIn platform gathers and collates SME real-time financial data, enhanced with additional information—such as ratings from Moody’s and Dun & Bradstreet—to help predict the payment behaviors of SMEs, and how long it will take a given company to repay its debts. TradeIn then shares that information with a marketplace of lenders it has created, matching an SME to the right lender.  

“Everyone sees this innovation as making their lives easier,” says Jack Ntoko, TradeIn co-founder. “Finding financing is an administrative burden for SMEs. We help them gain the benefit of time. And for banks, we provide them with hyperqualified leads.” TradeIn has thus far worked with more than 7,000 French SMEs. Current banks in the marketplace are based in France, Africa and the Middle East.

Bolstering SME Finance

Banco de Bogotá’s Digital Lab began in 2017 as an internal project. In 2022, it branched out, focusing on building relationships with fintechs in Colombia. The goal of these relationships is to offer better value to bank customers. Its relationship with Buk Partnership will help accomplish that. Banco de Bogotá now offers its SME customers access to the Buk platform’s digital HR and payroll capabilities. A similar offering was nurtured in EFG EV Fintech. This accelerator program, based in Egypt, invests in early-stage startups, while also providing these companies with legal and administrative support and office space. Typical investments run anywhere from $25,000 to $500,000. It works with Paynas, an employee management and benefits company with a cloud-based platform providing financial services to micro, small and midsize enterprise. These services include time management, attendance, payroll and health insurance. Albillio, nurtured by Startup Wise Guys, is a similar offering developed for freelancers working in multiple countries. It is an invoicing, accounting and payments platform that also  helps with legal setups, VAT invoicing and tax payments. In Turkey, Deniz Aquarium incubated Nurio.io, a platform that collects business finance and accounting information in one place, then provides financial analysis based on this information. In doing so, Nurio.io empowers businesses of all sizes to make data-driven decisions.

BTG Pactual is the largest investment bank in Latin America. BoostLab — Powered by BTG Pactual was created in 2018 in an effort to help the bank become the destination for tech company banking in Latin America. In the past five years, boostLAB has accelerated 76 startups, and additionally did business with 70 of them. Now, the lab has begun more aggressively investing in startups accelerated, with each company receiving up to $300,000. One of the companies receiving investment in 2022 was Ali Crédito, a payroll loans platform helping users find loans at the best available rate.  

Improving Retail Services

Increasingly, retail customers demand digital services, and fintech labs nurture innovations for this market segment.

In Poland, RBL_START, a program run by Alior Bank, has worked with the startup Billtech to produce a service that enables clients to manage and pay bills and invoices online or through the Alior Mobile Banking App. A new buy now/pay later system, the first in Poland, enables clients to delay payments for up to 30 days at zero interest. If a user has not paid off the purchase in 30 days, the loan can be extended for another 11 payments, at an APR of 16%.

Anna Kulik, head of Alior’s credit division, believes that “Alior Pay responds to the need of controlling your finances and debts in the most natural and convenient way—inside your banking app. After many customer surveys that we have conducted in our Innovation Lab, we confirmed that the bank is the place where Polish customers want to track all their expenses, credit limits, obligations or instalments. They do not have to set up separate accounts, download applications or search through their mailbox to find out how much and who they owe to.”  

Savvy investors will appreciate Invest+, a digital investment consolidator developed by the inovabra lab for Banco Bradesco clients. This app aggregates different positions in the Brazilian stock exchange, including stocks, treasury and real estate funds, among others. The objective is to provide clients with greater insight into, and control over, their investments. Currently, more than 172,000 Banco Bradesco clients use the app. BofA Breakthrough Lab has accelerated Muse, an AI-powered platform that enables financial institutions to provide their clients with custom, scenario-based tax and financial planning. Similar innovations are being birthed at FinTech Innovation Lab. Its New York City location (it also has operations in Asia-Pacific) has thus far graduated 270 alumni, who combined have raised $2.7 billion in funding. Among them is Mark Labs, an AI platform that helps asset managers link investments to targeted financial returns aligned with the investor’s environmental, social and governance goals.

Sometimes, customers don’t need advice. They just want an easier banking experience. Yapi Kredi and the National Bank of Kuwait are making that happen. Yapi Kredi—the fourth largest publicly owned bank in Turkey by asset size, was established in 1944. Its FRWRD program was designed to create a framework to produce continuous bank innovation. The Yapi Kredi Fast FRWRD Acceleration Program works with startups. Innovations include the Yapi Card “information display with augmented reality.” This system enables customers to view their card information, remaining balance, available limit, current debt and other information in Yapi Kredi mobile applications simply by scanning their credit, debit and prepaid cards—bypassing the need to enter a password each time. NBK’s newly designed mobile banking app is the product of the NBK Group Digital Office. Its redesigned, easier-to-use dashboard offers transaction shortcuts and personalized information.  

Decentralized Finance Benefits Banks and the Unbanked

Decentralized finance (DeFi), or the use of cryptocurrency and blockchain to manage financial transactions, will both help serve underbanked populations and, by streamlining processes for transactions and bookkeeping, help improve bank operations. Several innovation labs are studying this innovation. LIFT virtual lab, run by Fenasbac and the Central Bank of Brazil, was founded in 2018. It has thus far accelerated 93 projects related to financial innovation. One of the projects nurtured is a DeFi liquidity pool, enabling exchanges between the Brazilian real and the USDC—a digital coin pegged to the United States dollar. The Financial Innovation Laboratory of Brazil, another innovation hub in that country, is an initiative of the Brazilian Development Association, the Inter-American Development Bank and the Brazilian Security and Exchange Commission, in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit international trade and development organization. It acts as a think tank, promoting cooperation among more than 335 public and private entities. It recently published a report called “Theoretical Considerations: Decentralized Finance and Digital Identity.” The report examines ongoing national and international initiatives to address the challenges of applying digital identity solutions for DeFi and crypto assets.

Obtaining New Customer Insight

CaixaBank is Spain’s third-largest lender, after Santander and BBVA. It is undergoing a two-pronged digital transformation. First, its transformation efforts seek to promote the technological automation and agility needed to reduce time-to-market for major bank projects. The bank also seeks to offer customers an omnichannel banking experience. Extrapolating new insight from data is a large part of these efforts.

To meet its transformation goals, CaixaBank built an internal Customer Experience LABs and Insights Center. The Insights Center is a research hub dedicated to developing a 360 view of each customer. Creating a singular, comprehensive view of each customer’s data is often a challenging task. Banks have traditionally stored customer information in siloed databases—with, for example, information on the customer’s mortgage stored separately from information on his car loan, which is stored separately from information on his saving account. These siloes hindered decision making by giving bank personnel only a fractured view of each customer’s relationship with the bank. With a 360 view of each customer, CaixaBank will be able to glean the customer insight needed to develop better, more successful products.  

The internal Fidelity Center for Applied Technology/Fidelity Labs is working on a similar innovation: blending AI, algorithms and human advice to better target customers with more personalized offerings.

In the Kingdom of Bahrain, Bank ABC is also seeking new value from its data. Founded in 1980, Bank ABC is one of the Mideast’s largest international banks, with a presence in 15 countries and five continents. ABC Labs was founded in late 2019 as an effort to help the bank grow. As a result of lab efforts, ABC has already developed a cloud-based mobile-only offering, Ila bank. It has also spearheaded a cloud-based wholesale banking exercise, making it the first bank in the Mideast to build its core business capabilities on a public cloud. Most recently, the lab has developed ways to capture and analyze customer data in real time. This includes transaction data and customer interactions with digital channels. This, in turn, improves bank business: The lab’s use of data and analytics enrich customer engagement. Even better, by equipping relationship managers with data analytics and more comprehensive client views, the bank can anticipate the needs of large customers, and offer bank products to meet those needs. 

Similar innovations are underway in the United Arab Emirates. The internal Mashreq Wholesale Digital Innovation Lab recently introduced the Pulse integrated relationship management platform for corporate banking staff. The platform uses analytics to help relationship managers and others get to know the people behind the companies they serve. This platform helps relationship managers improve sales and accelerate crediting decisions. It also provides front-line staff with a single platform for managing their work.

Improving the Environment

Environmental, social and governance policies and products are all around us—in the financial world as much as anywhere else. Several labs have developed innovations in alignment with ESG protocols.

BNP Paribas Fintech Accelerator is working with Plug and Play on Plan A, a Berlin-based automated B2B SaaS platform that enables companies to measure, monitor and reduce their environmental footprint and improve ESG performance. The platform automates data collection processes, delivers results in alignment with reporting frameworks and generates carbon-reducing strategies. Similarly, OTP Bank Innovation Lab worked with the New Zealand–based startup Cogo to develop a carbon-footprint management tool. This tool enables businesses and individuals to measure, understand and reduce their environmental impact. These tools are being presented as a feature of OTP’s mobile banking app. Barclay’s Eagle Labs has partnered with the Carbon13 Centre Launchpad to help early-stage businesses launch climate technologies. The Taishin Innovative Financing Lab is working to develop new financing instruments that help investors obtain higher returns on ESG investments.

SMEs are significant drivers of job creation and economic growth. Yet, unlike in the developed world, where they are treated as the goose that lays the golden egg, it is survival of the fittest in Africa.

African Development Bank data shows that SMEs account for up to 90% of businesses and almost 70% of employment in Africa. However, they are grappling with a $421 billion financing gap. The inability to access credit and other challenges have meant a high mortality rate for SMEs.

Frédéric Oudéa, CEO of Societe Generale, contends that for a continent full of opportunities undergoing profound changes, SMEs should not suffer a lot. “We are convinced that growth in Africa will come primarily from the private sector,” he says, adding that for this to happen, SMEs are essential.

Societe Generale wants to help Africa’s SMEs grow and prosper. With SMEs representing two-thirds of its corporate clientele, the bank has adopted multidimensional support as a critical focus of its strategy. This, coupled with its Grow with Africa initiative and the Women in Africa project, has seen the bank raise over $100 million that can be loaned to SMEs.

Over the next three years, the bank intends to double its loan book to SMEs. This stems from the understanding that these businesses represent Africa’s future in responding to the continent’s long-term challenges, particularly regarding job creation and innovation.

OCBC Bank has been recognized as the Best SME Bank in the Asia-Pacific region by Global Finance, acknowledging the bank’s outstanding support of the SME ecosystem.

It has fostered digital and sustainable financing in the region amid an increasingly challenging business environment.

The bank succeeded in opening 98% of SME accounts digitally and performed 86% of SME banking transactions digitally, and it continues to help SMEs unlock the value of their data to obtain better business outcomes.

In Singapore, OCBC has integrated business financial-management capabilities into its digital business banking platform. It allows SMEs access to a 360-degree view of their sales, expenses and cash flow trends, enabling them to identify patterns and obtain insights key to better business planning.

The bank has also launched the OCBC SME Sustainable Finance Framework to simplify access to less costly green loans to help SMEs shift toward sustainability.

It also rolled out the framework to its core markets in Malaysia, Indonesia and Hong Kong, adapting it to the relevant local certifications and standards.

Meanwhile, the bank launched the OCBC SME Index in Singapore to consistently track the pulse and performance of SMEs. Available as a quarterly report, the index helps the bank keep a laser focus on areas of growth for SMEs and know where support for them is needed.

In operation since 1941, Banreservas is the largest bank in the Dominican Republic and is the only bank with physical branches in all of the nation’s provinces. Roughly 15% of all Banreservas’ business comes from SMEs, representing $1.02 billion of the bank’s $6.95 billion portfolio.

When a government survey found that 74% of SMEs in the Dominican Republic had to cease operations during the Covid-19 pandemic, and the rest had to reduce operations, Banreservas was tapped by the Dominican government as its partner in implementing a series of emergency financial measures. In addition to issuing and administering pandemic-related loans and lines of credit. Banreservas has created a program called Fomenta Pymes (“Promote SMEs”) to integrate products, services, service channels and other benefits into this vital sector. Products and services offered include electronic payroll services, and insurance policies to protect against fire, accidents, machinery breakdowns, civil liabilities and other catastrophes. Emergency road service and towing are available for corporate vehicles. A pocket point-of-sale solution enables even the smallest businesses to accept credit and debit purchases through any iOS or Android mobile phone.  

Based in Georgia, TBC Bank won the Best SME Bank in Central and Eastern Europe award for supporting the growth and development of SMEs and for its innovation and presence in the agriculture, trade, hospitality and leisure sectors. Its efforts captured a 65% market share of newly registered Georgian businesses.

The bank’s strategy includes increased digitization, automation and distance services. In 2021, it shortened the approval process with fully automated approvals on smaller loans. For larger loans, it is automatically generating financial statements for the SME.

Digital services continue to be in high demand, with about 90% of the bank’s active legal customers using business internet or mobile banking, along with open banking so that they can check all accounts from various Georgian banks in one place. TBC implemented innovative features on its business app for automatic payments and transfers in any foreign currency. Its new Payments Space platform helps SMEs manage daily transactions and other payments.

Agriculture accounts for about 7% to 8% of Georgia’s GDP, and TBC has launched various products to support this industry. These include loans available to SMEs that produce, store, process or sell agriculture commodities, as well as working capital to startups looking to develop a farm, and payment cards to SMEs that earn income from agriculture activities. TBC also offers loans cofinanced with the Georgian Ministry of Agriculture to improve farming processes.

BTG Pactual Empresas has seen the future of banking for SMEs, and that future is digital. The Brazilian bank, formerly known as BTG+ business, now conducts virtually all its business in the digital world. Its intensive technology enables low-touch online processes, ranging from SME account applications and onboarding to disbursements and collections. These innovations have been designed to provide SMEs with a wide variety of low-cost products and services. For example, SME customers incur no monthly account fees or setup costs. Ease-of-access is also a significant SME draw: In 2022, 99% of new SME accounts were fully functional within an hour of application.

The importance of accommodating the SME market in Brazil cannot be overestimated. BTG Pactual Empresas estimates that MSMEs represent about 90% of the country’s companies and are the biggest source of job creation in the nation.

SMEs have taken note of BTG Pactual Empresas’ offerings. The bank’s SME portfolio grew 82% year-over-year from 2021 to 2022, with SME loans reaching 18.9 billion reals (about $3.6 billion), 17% of the bank’s total business for the first quarter of 2022. Special programs for rural credit, solar power and green financing, and financing for women-owned businesses make obtaining credit easier for SMEs involved in these sectors. Typical time-to-credit is only about 30 minutes. Additional offerings include insurance services, investment services, and foreign exchange services.            

With the largest network of ATMs and branches in the nation, Qatar National Bank (QNB) provides the coverage that Qatari SMEs need. It also offers a dedicated SME center in Doha that meets the requirements of small and midsize businesses. The bank currently serves more than 22,000 of the roughly 60,000 SMEs that operate in the country.

QNB offers these customers a broad array of products and services. These include working capital and trade products, commercial loans and credit cards. Working with the Qatar Development Bank, it also offers programs to finance startups that would otherwise not qualify for loans. Online and mobile capabilities enable invoice payment and other business-management tasks. Notable among these digital services is a trade portal, helping importers and exporters with QNB accounts to complete trade transactions. For retailers, QNB offers a wide range of point-of-sale solutions that can be customized to meet business requirements.

Royal Bank of Canada (RBC) has more than 1,000 branches nationwide, but traditional banking capabilities are only the start of the broad array of services offered to businesses, including SMEs. Business registration, legal help, digital transformation services, analytical insights, marketing help, e-commerce help and international trade services are all offered. So is a small-business navigator designed to help people at the earliest stages of business ownership. Ownr, an RBC Venture, is an online platform that has helped more than 55,000 entrepreneurs launch their businesses. RBC Insight Edge enables companies to leverage aggregated data to gain relevant insights into their markets, helping them attract new clients.

With offices in Spain, Portugal and the UK, Santander wins the award for Best SME Bank in Western Europe. SME clients make up over 90% of the bank’s total active corporate clients, with approximately 80% of their SME customers being digital.

In Portugal, Santander focuses on the entire value chain for SMEs with a specialized and proximity-based commercial approach. It has 22 corporate centers with over 90 corporate managers and about 300 business managers in nearly 340 branches who focus on SMEs, as well as an increasing focus on digital channels. The bank has created an ecosystem of portals, financial products, services and tools for an omnichannel experience that helps SMEs operate in an increasingly digital world.

Santander is focused on developing partnerships and offerings that meet SMEs changing needs and the challenges presented by environmental, social and governance concerns, as well as increased digitalization and globalization. The bank offers continued support to SMEs by ensuring liquidity with state aid credit facilities and providing economic support lines for Portuguese companies.

Its digitized solutions, including marketplace Santander Trade, customer-care service International Desk and global payments platform PagoNxt, have made operating across international borders easier for SMEs. Santander also offers tailored solutions to help SMEs become more efficient and sustainable by reducing energy costs.

How innovative are you?

Hans Brown, global head of Enterprise Innovation for BNY Mellon, wants to know. He’s betting that whether you lead cryptocurrency efforts at your bank or just write lines of credit, you’re more innovative than you give yourself credit for. That’s why IdeaWorks is a key component of the BNY Mellon Enterprise Innovation group. The program seeks to crowdsource ideas from within the bank to drive innovation. Over two weeks, employees develop ideas of how to transform BNY Mellon processes. Employees vote on their favorite concepts. The bank builds the best.

The ever-faster pace of technology coupled with Covid-19 generated expectations for digital experiences have prodded the notable fintech hubs, labs, incubators and accelerators examined by Global Finance to seek innovation wherever they can find it. They look internally, through relationships with outside startups, or—as in the case of the BNY Mellon Enterprise Innovation group—through some combination of both.

“Our mission is to accelerate innovation through collaboration and make sure it happens everywhere—not just within the realm of a special few people,” Brown says. “We’re trying to harness our collective capabilities to find new ways of thinking; new ways of doing. This may be using data and insight in ways we haven’t before or connecting services in ways we haven’t before. IdeaWorks is a real cultural change. People have great ideas. Almost everybody can be an innovator. They just need the right processes and tools.”

Brown pointed to the last IdeaWorks challenge, in BNY Mellon’s Global Operations and Technology Division, with nearly 40% of division employees participating. Brown would like to see even wider participation as time passes: “We’re trying to create opportunities to energize everybody, to harness the collective capabilities of our entire organization. We want 15,000 innovators.”

Seeking innovation from as-yet-untapped minds is also critical to the Morgan Stanley Multicultural Innovation Lab. Now in its fifth year, the New York–based lab has thus far accelerated 59 companies. It is expanding to reach markets in Europe, the Middle East and Africa with the opening of a second lab, in London. The lab strives to spark innovation among startups headed by underserved populations—notably, women and people of color. Morgan Stanley believes that lack of funding for these companies represents more than $4 trillion in unrealized returns.

Selma Bueno, managing director and head of Multicultural Client Strategy at Morgan Stanley, believes the lab “clearly identified a funding gap. Data shows that there are a significant number of women founders and founders of color with insufficient capital,” to bring their ideas to market. “We think that’s a significant missed opportunity,” she says.

Morgan Stanley was among the first to create a lab focused on women and people of color. “It’s a highly curated experience, tailored to each founder,” says LaToya Wilson, executive director of Multicultural Client Strategy. “Every founder is different …There is no one-size-fits-all.” In general, services received by startups during their five-month tenure include leadership coaching, sales coaching, workshops and development of go-to-market strategies. Founders also can forge relationships with Morgan Stanley experts, with mentors—culled from senior Morgan Stanley staff—and others. Today, the companies accelerated have a combined valuation of more than $515 million, and have raised a combined $100 million since graduating.

“As the world digitalizes with nonfinancial retail experiences, the art of the possible becomes what people believe,” says Brown. “Covid-19 created a paradigm shift: how we create services; where we service. That’s accelerating the demand for new technological capabilities.”

Those capabilities are germinated in fintech labs around the world. This, Global Finance magazine’s fifth annual review of the world’s best financial innovation labs, showcases in detail a selection of these leading innovation centers.

Arab Bank Innovation Hub was founded in 2018 to accelerate development of disruptive technologies, with individual labs in Jordan, Egypt and the United Arab Emirates. Of its three main programs, AB Accelerator partners with startups–providing workspace, access to resources, meetings with decision makers across Arab Bank’s 20-country network and the chance to develop proofs of concept. Thus far, the accelerator has invested $2.8 million in seven startups. Products accelerated focus on buy-now-pay-later financing, cybersecurity and insurance. Additional proofs of concept are being developed in the fields of blockchain, credit scoring and AI.

Additional arms of the innovation hub focus on product development and internal innovation. Product development programs encourage employees throughout the bank to submit innovative banking ideas and spread awareness of new technologies that can shape the future of banking. One concrete outcome: Reflect, the first neobank in Jordan.

In São Paulo, Inovabra, sponsored by Banco Bradesco, is an innovation ecosystem offering internal entrepreneurship, international collaboration, a capital fund, an internal research team and a startup program forging strategic partnerships between the bank and fintech companies offering products or services applicable to bank needs. Thus far, the lab has nurtured more than 220 startups, developed more than 200 proofs of concepts and hosted more than 2,500 events. Products developed center on big data, blockchain, the Internet of Things and immersive computing. Innovations include Smarkets’ B2B supplier relationship platform, which uses AI to help with price negotiations.

Inovabra offers a 22,000-square-meter (236,800-square-foot) coworking space called inovabra habitat. Lab activities include mentoring and demo days. Investment is possible from the Inovabra Ventures proprietary equity fund, currently valued at 850 million Brazilian reais (about $168 million). So far, the fund has invested roughly 366 million reais in 14 startups. A virtual version of the lab gathers companies from all over Brazil to probe opportunities within Banco Bradesco and its partner companies; more than 2,600 startups have registered.

Beginning life in 2017 as an internal lab, Banco de Bogotá’s Digital Lab now partners with outside fintechs to strengthen the Colombian banking system and devise new solutions for clients. The bank launched the lab with 30 employees, and now boasts an internal staff of about 460 (with 100 new hires in the past year alone), focusing on digital innovation as a lever for growth and improved customer experiences.

The lab produced a completely digital savings account, the first of its kind in the country and part of the bank’s effort to become a digital-only institution. In 2021, it sold more than 1.5 million products through digital channels, a 79% increase year-over-year. Currently, 80% of credit card and 85% of personal loan issuances are made digitally.

Lab partnerships include a relationship with SoyYo, a fintech deploying biometrics to improve authentication of customers; Mareigua for authenticating processes and approving conversion rates for new clients; and Buda, a company enabling residents of Latin America to invest in the worldwide cryptocurrency market.

In addition to IdeaWorks, the new BNY Mellon Accelerator Program is quickly becoming an important part of BNY Mellon Enterprise Innovation Group. The accelerator was founded in 2021; graduation of its first cohort and arrival of its second was announced in April. With offices in New York, London and Singapore, the accelerator program seeks emerging tech companies that can help the bank meet specific challenges.

“We are very deliberate in the accelerator program,” Brown says. “Everything created focuses on a real business problem that we need to solve. It’s not, ‘Here’s a solution, let me run around looking for a problem.’ Rather, it’s a matter of, ‘Here’s a problem we have, or one of our clients has. How do you solve it?’”

Companies selected for the accelerator have up to six months to build a proof of concept with measurable results. Successful participants become BNY Mellon strategic collaborators or vendors. A venture capital (VC) advisory board helps with investments, while express processes for risk assessment aid the bank in quickly bringing new technologies into its ecosystem.

The impetus for forming an accelerator was simple. “Working with the most cutting-edge technological startups in the world helps us innovate faster,” Brown says.

Innovations multiplied, including the BondIT algorithm-driven, fixed-income portfolio optimization solution. It provides financial advisories with real-time, end-to-end processes to determine pricing and optimize portfolios at scale.

The Citi Accelerator program is a key component of Citi Innovation Labs, an organization devoted to delivering cutting-edge technological solutions to Citi’s institutional clients. Citi Accelerator offers startups a four-month program during which they are mentored by key Citi decision-makers. The program is designed to develop startups’ understanding of how to shape their products to meet the needs of large organizations. Program participants work in Citi Innovation Labs. Thus far, the accelerator has graduated more than 120 startups, which raised more than $2 billion from Citi and other investors. Recent innovations from the accelerator include a platform to expedite the adoption of blockchain technology.

Hosted by DBS Bank, DBS Asia X (DAX) is one of Singapore’s largest innovation centers. In its 16,000-square-foot coworking space, DBS employees, startups and the broader fintech community come together to innovate. Its Startup Xchange program matches startups with project teams that focus on emerging technologies. In 2021, startups in the Xchange developed six successful proofs of concept. Since the start of Covid-19, DAX provided virtual workshops and live streaming of forecasting sessions and planning sessions. New for 2021 was the development of DAX’s Deep Xperts program. Through this program, more than 100 senior DBS employees—expert in domains such as consumer finance, secured lending, digital banking, blockchain, AI, the Internet of Things and 5G—are matched with industry experts from big tech to improve the bank’s technology.

Deniz Aquarium is the innovation and entrepreneurship arm of Neohub, a subsidiary of Istanbul’s DenizBank. It supports both in-house entrepreneurs and outside startups. The lab’s Startup Acceleration Program provides companies with office space and support for rapid growth, identifying the needs and shortcoming of each startup and deploying expert mentors to help with product development. Unlike most innovation labs, which accept new startups at set times throughout the year, Deniz Aquarium is always open for applications. Startups accepted may join at any time. The lab has preemptive rights to buy up to a 15% share in each startup accelerated.

One significant product to come out of Deniz Aquarium is Midas, a commission-free digital stock brokerage platform enabling Turkish investors to trade shares on both the Turkish and US stock markets.

Elevator Lab Powered by Raiffeisen Bank International (RBI) is the largest fintech and startup program in Central and Eastern Europe. Its four-month Elevator Lab Partnership Program helps later-stage fintechs improve products and scale internationally. Thus far, it has fully funded 25 proofs of concept. This is an equity-free program, though investment is possible through Elevator Ventures, which supports early-stage and growth companies in fintech and related technologies.

Two additional facets are the Elevator Lab Bootcamp and Elevator Lab Challenge, both organized by RBI’s network banks. The Bootcamp focuses on early-stage startups, offering them expert help in developing minimum viable products. The Challenge provides local latter-stage startups with the possibility of pilot projects with local Raiffeisen banks.

Based in Slovakia, Elevator Lab powered by Tatra banka, a member of the RBI Group, is one of these regional efforts. It offers fintech startups the mentoring and education needed to scale their products and services. Startups work in conjunction with teams of bank programmers, designers, data analysts, market research experts and businesspeople. These teams strive to speed the development of the sorts of prototypes that can help the bank meet its digital goals. Innovations include products by Zentity to enable easy integration of third-party plugins for Tatra banka’s applications—including add-ons for food ordering, storing digital receipts and topping up telephone services. A second innovation is Premium API, helping business owners with invoicing and payment reconciliation.

In operation since 2016, the mission of ING Labs is to validate new businesses for ING and its clients. Businesses incubated focus on disruptive services for lending, trade, security, compliance, retail mortgages and improving consumers’ financial health. To develop and deploy these services, ING may either partner with an existing scaleup or form one of its own from among ING’s in-house talent pool.

The lab has four outposts: Brussels and London act as later-stage accelerators, scanning the market for major scaleups that offer products ING believes can help it and its clients. The lab then offers a one-year program to test products for commercial viability. Amsterdam and Singapore incubate earlier-stage startups. The four labs typically house between 20 and 30 ventures at a time. Funding comes from the €25 million ING Innovation Fund, devoted to accelerating innovation across the bank. Current products generated focus on machine learning and digital processes for meeting know-your-customer requirements.

Mashreq Bank’s Wholesale Digital Innovation Lab was instituted in 2020 with a cohort of five people, and has since scaled to 120, with an annual budget of $15 million. The lab actively partners with various accelerator programs (notably with Startupbootcamp) to make fintech investments—with more than 30 bootcamp graduates having thus far received Mashreq funds.

The Mashreq lab’s goals are to build and deploy predictive analytics in support of client growth and cost reduction; provide corporate clients with a rich, digital-first user experience; and to build next-generation digital products, particularly in the fields of high-value payments and trade finance transactions.

Innovations from the lab include Pulse, an integrated relationship management platform for corporate banking staff that deploys analytics to help understand clients as people, augmenting sales and accelerating crediting decisions, and also provides frontline staff with a single platform for managing their work. A second lab focuses on retail banking.

Morgan Stanley’s Selma Bueno calls the Morgan Stanley Multicultural Innovation Lab “an intensive Ph.D. program in being a startup.” But while learning is great, so is cash. The New York-based lab also provides startups—typically in the post-seed to Series B rounds of funding—with $250,000. (Those participating in the London lab, for the EMEA region, will receive £200,000.)

The program is proving increasingly popular: Wilson says that more than 500 companies applied for the most recent session. Morgan Stanley accepted 10. The EMEA accelerator will accept only five.

Fintech innovations recently arising from the Morgan Stanley lab include Zirtue and Stimulus. Zirtue is a relationship-based lending application that streamlines and formalizes loans among friends and family. Stimulus is a purchasing platform that uses data and analytics on vendor demographics, aiding decision-makers who want more cultures represented among the companies with which they do business.

The National Bank of Kuwait Group Digital Office was launched in 2018 to accelerate digital transformation across the bank. Group Digital Office staff forge partnerships with outside fintechs to improve and enrich the bank, scouting fintechs and matching them to bank stakeholders with high-level technical requirements. NBK’s investment arm, NBK Capital, finances startups, investing about $10 million annually in these companies.

Innovations nurtured by the Group Digital Office include Weyay Bank, the first fully digital bank in Kuwait. Additional programs include the NBK Online Hackathon, a partnership with Coded Academy, to help generated new ideas for mobile banking. Twenty-five teams of fintech programmers competed in the last hackathon. In 2021, the Group Digital Office also established a design center focused on the user experience.

In Hungary, OTP Lab, launched in 2017, acts as the innovation hub of OTP Group. At its heart is the OTP Startup Partner Program, an international operation giving scaleups and later-stage startups a chance to build relationships with OTP. This is a nonequity program with no guaranteed funding. However, the lab works closely with OTP Group’s VC arm, PortfoLion, which invests in innovative entities. Lab partners include Amazon Web Services, Mastercard and Microsoft. In 2021, the lab incubated 15 companies. Over a three-month period, these startups develop pilots, and on demo day, certain fintechs are chosen to work with the bank. New for 2021 was the establishment of the lab’s venture-building arm.

The Bulgarian company Appraiser.ai is a recent graduate. The company uses the latest AI and machine learning technologies to deliver insights to the mortgage market, then automate valuation models for customers.

Wenov by Attijariwafa, founded in 2019, is an innovation lab with several arms. These include Smart Up & Ideation, an internal program enabling bank employees to carry out innovative projects; and WeDesign, which strives to imagine the digital banking experience of tomorrow. But the heart of Wenov is WeLab, an innovation lab that works with outside startups, offering the coworking space and guidance needed to accelerate time-to-market for fintech products. Funding is available through two investment companies created by Attijariwafa, and through Attijariwafa’s partnerships. Attijariwafa investments in companies nurtured typically run between €200,000 and €3 million.

In 2021, Wenov interacted with more than 120 startups, with 30 taking part in WeLab. Products included robotrading and real-time AI solutions to provide customer insight Chatbots aren’t new, but Moroccan language presents particular challenges. “What most people speak here is more of a dialect than a language,” says Mohamed Moullouze, Attijariwafa chief innovation officer. “It’s a mix of Berber, Arabic, French and English. Most AI and natural-language processing technologies are based on structured languages—English, for example, or French.” Working with startup AIOX Labs, Attijariwafa was able to deploy a Smart Customer Listening platform to support real-time decision-making based on the language of the customer.

Startups also take part in Wenov’s Fintech Catalyst and WeLab Boost offerings. Fintech Catalyst is an open innovation program through which the bank identifies its own challenges and use cases, then seeks out fintechs to solve them. Fintech Catalyst ran 12 challenges over the last year, with roughly 100 fintechs taking part. A dozen were chosen to develop proofs of concept, then seven were selected for ongoing relationships with Attijariwafa.

WeLab Boost gives the bank the opportunity to better understand and consider technological innovations—such as AI, blockchain, nonfungible tokens, the metaverse—and the benefits they may bring to Attijariwafa. Outside fintechs and others are invited to the bank to display their latest technologies. Based on the innovations seen and their potential benefits to the bank, Attijariwafa may choose to work with some of these startups.

Created in 2017, the Financial Innovation Laboratory of Brazil is an initiative of the Brazilian Development Association, the Inter-American Development Bank and the Brazilian Securities and Exchange Commission, later joined by the Deutsche Gesellschaft für Internationale Zusammenarbeit international development and education organization. It acts as a think tank, promoting cooperation among more than 265 public and private entities, with the goal of stimulating financial innovation and sustainability in Brazil. Participants range from government ministries to financial institutions, nongovernmental organizations (NGOs), universities and fintechs. It facilitates more than 500 meetings each year among these entities. The lab produces and disseminates information, proposes regulatory improvements and pilots innovative new products. All publications, webinars and suggested regulatory changes are made available to the public for free.

Fintech is one of the lab’s four working groups. Others include Green Finance and Finance for Social Impact Investments. Of the roughly 265 lab members, 40 are startups working with the lab to strengthen innovation in financial and capital markets. Agenda items include implementation of tokenized securities and sustainability-focused fintech.

One of the lab’s significant objectives is to help banks meet sustainability goals aligned with the Paris Agreement, says Gabriela Goulart, an economist working with the lab. The lab also created fintech and regulatory sandboxes, an approach enabling the live testing of new services in a limited way before rolling out innovations to the broader ecosystem. “One of the benefits is enabling regulation to become more accepting of innovation,” says Gabriel Porto, a fintech consultant working with the lab.

The Seoul metropolitan government in 2018 launched the tri-part Seoul Fintech Lab. Its Global Fintech lab offers customized programs to foster fintech startups that wish to reach a global market. Fintech Hub provides fintechs with opportunities for collaboration with banks, VC firms, other investment institutions and private corporations. Finally, the lab’s Fintech Network develops policies with institutions and policymaking agencies to create a healthy fintech ecosystem in South Korea.

The Global lab’s staff of nearly 1,400 serves fintechs less than seven years old, and has thus far nurtured 140 companies. The program provides fintechs with workspace for up to three years, along with sandbox computing, consulting services, demo days, investor relations days, B2B matching programs and marketing. No direct funding is offered, but startups can obtain investment through the lab’s relationships with the Korea Credit Guarantee Fund and others in its ecosystem.

Part of the Dubai International Financial Centre, DIFC Fintech Hive accelerates fintechs, insurtechs and regtechs. In 2021, Amazon launched its own fintech lab at DIFC, focusing on innovative digital payments.

Rome’s LUISS EnLabs is an accelerator run as part of the Hub LVenture Group lab. Operated by the publicly listed LVenture Group in conjunction with Luiss Guido Carli University, it provides early-stage startups with an immersive program including coworking space, mentoring, management, direct investment and opportunities for investor networking.

At Deloitte, an internal lab called Catalyst operates in the US and Israel. Catalyst consists of Deloitte innovation teams devising fintech solutions for the company’s institutional clients. Deloitte also hosts an external fintech accelerator in London, offering funding in exchange for equity stakes.

Bain Innovation Exchange professionals work with a network of established businesses, startups, venture funds and entrepreneurs to build, launch and scale disruptive new business products.

Based in New York, Synechron is an IT and consulting company with fintech acceleration programs across the globe.

Accelerator Frankfurt is a VC and private-equity firm offering a three-month, go-to-market program for B2B fintechs, insurtechs and other companies. The accelerator offers startups mentorship, coworking space, strategy and legal consulting, and marketing.

Also significant is Plug and Play, based in Sunnyvale, California. With dozens of locations worldwide, Plug and Play bills itself as the world’s largest startup accelerator and Silicon Valley’s most active VC investor, nurturing more than 2,000 startups since 2006. Accelerated companies operate in 20 different categories, ranging from financial services to agriculture and travel. Its three-month fintech program runs twice a year and connects startups with the needs of financial institutions.

With offices in Lisbon and São Paulo, Beta-i helps new and established businesses grow by offering innovation services in the fields of acceleration, corporate innovation and education. It runs Lisbon Challenge, one of Europe’s most active startup accelerators. Beta-i also supports a fintech-only program called the SIBS Payforward Accelerator.

MassChallenge is a 501(c) accelerator supporting early-stage startups with a four-month program of mentorship, training, office space, legal advice and access to funding. More than $1 million is doled out each year to top startups, no equity stakes required. It accelerates companies in nine different fields, including fintech.

TechQuartier, based in Frankfurt, caters to fintechs and other types of startups. (More than 40% of its 350 alumni startups work in fintech.) TechQuartier’s broad partner ecosystem includes Visa, ING, IBM and Deutsche Bank.

Small and medium enterprises (SMEs) are the backbone of the global economy. According to data from the World Bank, they represent approximately 90% of businesses worldwide, employ more than half the global workforce, and contribute about 40% to GDP. And the onset of Covid-19 hit SMEs hard, forcing them to reduce or cease operations.

Since the pandemic’s start, SMEs have turned to their governments and banking partners to help shepherd them through this period of unprecedented supply chain disruptions, liquidity crunch and labor shortages.

Simply surviving the pandemic will prove challenging for SMEs in developed, emerging and frontier economies. For example, the share of SMEs in developed markets that have negative equity rose by 6% between 2020 and 2021, threatening up to one in 10 SME jobs in those economies, according to the authors of an International Monetary Fund (IMF) discussion note Insolvency Prospects Among Small and Medium Enterprises in Advanced Economies: Assessment and Policy Options.

“This increase is similar to that seen in the five years after the global financial crisis, but it would occur over a much shorter period,” write the authors. “In a downside scenario with extended lockdowns and persistently weaker demand, the share of insolvent SMEs would rise by eight percentage points.”

In response, governments have responded by intervening in terms of loans, credit guarantees, payment moratoria and asset purchases, adding up to 11% of GDP by October 2020, IMF staff have estimated.

However, government funds are not limitless. As a result, countries face turning the stimulus tap off, or down severely, while trying to avoid a liquidity crisis among SMEs and aid their continued recovery.

Girding for a Tough Recovery

Financial access is a crucial constraint to SME growth and is the second-biggest obstacle facing SMEs in the emerging and frontier economies, note researchers from the World Bank. Nearly 65 million SMEs, or 40% of micro, small and medium enterprises (MSMEs) in developing markets, face $5.2 trillion in unmet finance needs, note the researchers, citing a 2017 study by the International Finance Corporation. Businesses in the Asia Pacific region represent the largest portion of the gap (46%), followed by Latin America and the Caribbean (23%) and Central Asia (15%).

Throughout the pandemic, SMEs have taken several approaches to rein in their labor costs. Of the more than 2,500 SME owners worldwide surveyed by Harris Poll for Salesforces fifth annual Small and Medium Business Trends report, 43% offered flexible working arrangements, 35% reduced employee hours, 19% furloughed employees, 14% gave employees a zero-hour schedule and 12% laid off staff. On the bright side, 12% of those polled expanded employee benefits while the majority (58%) did not alter them. Moreover, only 29% of the respondents chose to reduce them.

Returning SMEs to their pre-pandemic health should not be the goal for governments and financial institutions. SMEs will need to generate 600 million new jobs by 2030 to absorb the growing global workforce. “Building back better” is not an option but a necessity.

The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the winners for the World’s Best SME Banks 2022 based on a set of objective and subjective factors. Editors consulted entries submitted by the banks as well as  the results of independent research. Entries were not required.

Judges considered performance from April 1, 2020, to March 31, 2021. Global Finance then applied a proprietary algorithm to shorten the list of contenders and arrive at a numerical score up to 100. The algorithm weights a range of criteria for relative importance, including knowledge of SME markets and their needs, breadth of products and services, market standing, and innovation.

Once the judges narrowed the field, they examined the final criteria, including the scope of global coverage, size and experience of staff, customer service, risk management, range of products and services, execution skills and use of technology. In the case of a tie, the judges lean toward local providers rather than global institutions. The panel also tends to favor private-sector banks over government-owned institutions. The winners are those banks and providers that best serve the specialized needs of SMEs.

Under the high-stress conditions of pandemic, Singapore-headquartered United Overseas Bank (UOB) stepped up, earning accolades as the Global Finance Best SME Bank in the World 2022, for its support of its SME clients during these tumultuous times.

With more than 80 years of history, UOB leveraged the lessons it learned from navigating the Asian financial crisis of 1997 and the global financial crisis of 2008. The bank began pandemic relief in February 2020 when it announced S$ 3 billion (US $2.2 billion) in relief assistance for its SME clients.

From December 2019 through June 2021, the bank also increased its gross loan portfolio to S$299 billion from S$269 billion, an 11% increase. It maintained a nonperforming loan ratio at 1.5%. Loans to SMEs represent 14% of the bank’s gross loan portfolio, while loans to large corporates and personal loans represent 53% and 33% of the portfolio, respectively.

Digital technology is key. “We have always seen digitalization as one of the key opportunities for growth,” says Group Commercial Banking head Eric Tham. “However, the pandemic accelerated our clients’ needs to digitalize operations and processes, especially in the last 18 months … The takeup of digitalization offerings from April 2020 to March 2021 jumped sixfold compared with a year earlier.”

UOB also offers SME clients digital tools to improve operational efficiency, such as the bank’s BizSmart program—a suite of cloud-based applications that handle back-office processes like payroll, accounting, inventory and resourcing. BizSmart also lets clients access a direct feed to their operating accounts, permitting reconciliation with a click of a mouse.

FNB is Africa’s SME bank of the year and is recognized for its notable innovation and handling of finance products and credit repayment modalities for SMEs across its sub-Saharan Africa portfolio.

The bank has operations in South Africa, Botswana, Namibia, Eswatini, Lesotho, Mozambique, Ghana, Tanzania and Zambia.

FNB is also recognized for offering needed relief, and enhancing capacity for SME companies in its markets, in the context of pandemic-induced difficulties.

During the period under review, FNB initiated Covid-19 relief programs in Namibia and Botswana. For Botswana, this was in addition to investing in Wi-Fi boosters for its Cash Plus agents, most of whom are SMEs. The bank also launched Mogwebi, an insurance program for SMEs, and “installment relief for SME customers’ commercial property finance, vehicle and asset finance and term loans.”

FNB also started allowing SME customers to apply for loans via its Ghanaian digital platforms. Collateral challenges still dog entrepreneurs across Africa; FNB Namibia partnered with the Development Bank of Namibia on a risk-sharing initiative aimed at alleviating these constraints.

In its largest market, South Africa, FNB offers a toolkit that assists businesses coping with Covid-19, as well as accounting, invoicing and payroll support.

Singapore-based United Overseas Bank (UOB) wins as the Best SME Bank in Asia Pacific 2022 for its imaginative support of SMEs during the pandemic. UOB has broadened its range of solutions and services, aggressively pursued digital transformation and focused on maximizing cross-border SME services. The bank notably saved many SMEs during the crisis by leveraging its long-term experience of serving smaller clients in Asia to understand their needs and their vulnerabilities.

In the past year and a half, UOB’s gross loans grew by 11%, to 299 billion Singapore dollars (about US $222 billion) by June 2021. Despite this aggressive portfolio growth, UOB’s nonperforming loan ratio remained stable at 1.5%. SME loans compose 14% of the bank’s total loan portfolio.

UOB rolled out a series of targeted initiatives, including digitalization strategies and solutions to immediate business challenges, to help established firms and startups across Asean. In addition, the bank made financing more accessible to small businesses via a data-analytics-powered credit underwriting engine, ensuring that quarantine rules did not hamper support.

Although government support has played a key role in supporting SMEs during Covid-19, creative support from banking partners has been critical. UOB has been a luminary in this area.

During a year in which 74% of surveyed local companies closed due to the Covid-19 pandemic and 26% of companies partially shut their doors, the Dominican Republic’s Banreservas acted as a role model for other regional banks, winning the inaugural title of Best SME Bank in the Caribbean through financial relief—working with the national government and leveraging the bank’s digital strategy and overall support for its SME clientele.

The bank works with the government and Fiduciaria Reservas in an initiative to let SMEs accelerate payment of invoices to companies that supply goods and services to the Dominican state.

To enable easier access to governmental relief measures, Banreservas also developed and deployed a new digital product based on existing client-card identification numbers augmented with new unique PIN numbers. More than 700,000 households could use these with point-of-sale systems at approximately 4,400 groceries, warehouses and department stores, without using a physical card.

The bank also held multiple loan fairs for micro, small and midsize enterprises (MSMEs) throughout the pandemic, in which the bank provided more than 4,400 loans totaling approximately $190 million in capital borrowed.

Operating throughout Central America, BAC Credomatic earned the title of Best SME Bank in Central America for its digitalization strategy, pandemic-related financial relief and financial education offerings.

Well along its digitalization road map before the global outbreak of Covid-19, the bank prioritized further digitalization to eliminate physical interactions where it could. It leveraged its existing investments in WhatsApp, webchats and chatbots to improve client self-service capabilities, which decreased call volumes—by 30% in Panama, for example—and resulted in 90% of all customer interactions and 60% of all monetary transactions happening digitally.

In Costa Rica, within the first few months of the pandemic, BAC Credomatic offered corporate clients bespoke relief packages and provided SMEs an option to delay payments for two months. The bank has administered programs that empower SMEs, provide financial education and push for further social responsibility. In Panama, BAC Credomatic has run similar programs and funded organizations for Covid-19 victim relief, as well as enacting financial education programs for women.

The OTP Bank Group takes this year’s prize for Best SME Bank in Central and Eastern Europe (CEE). The bank has maintained its role as a strategically important player in this region; and through its products and technology, it has helped small businesses in the region to grow.

The bank has been expanding its international footprint through both organic growth and successful acquisitions to become the fourth-largest banking group in CEE. Currently, OTP Bank operates in 11 countries via its subsidiaries. It is the market leader in Hungary, Bulgaria, Serbia and Montenegro and a top-five local bank in Croatia, Slovenia, Albania and Moldova. The bank serves 18 million customers through 1,750 branches in the various regional markets. The bank also specializes in important industries in these regions, such as agriculture, trade, food and renewable energy.

OTP Bank offers a wide range of products to the SME segment in these countries, including working capital and investment. The bank has digitized its platforms to offer SMEs online banking services, as well as electronic invoicing and cash flow reports. The bank has also focused on developing a new internet bank and reengineered its loan processes to better serve its customers.

Banco do Brasil is Brazil’s oldest bank and the second largest by assets in Latin America. In the SME realm, it has 12% of the domestic market—representing 2.6 million companies and 17% of the bank’s total business. Banco do Brasil serves SMEs with 7,000 service professionals, 215 SME-exclusive branches, 1,701 retail branches with dedicated SME services, and nearly 5,000 specialized service points. It also offers SMEs 396 business platforms and 449 entrepreneurial hubs.

Covid-19 support included $22.4 billion in loans to this borrower segment, benefitting roughly 395,000 clients. Loans provided working capital, payroll financing, advances on receivables and more. Loan extensions and grace periods were also offered.

Technology plays a significant role in Banco do Brasil’s operations, and never more than during the pandemic. Installment extension requests were processed via the bank’s Digital PJ mobile app, which in 2020 processed more than 1.05 billion transactions and interactions. These included consultations, chats and loan applications. In addition, the bank debuted technologies that enable microenterprises to open checking accounts digitally and access services including automatic deposits, withdrawals and cash transfers. Finally, the bank partners with the nonprofit Brazilian Micro and Small Business Support Service business-development organization to engender a sustainable environment for Brazilian SMEs and microenterprises.

Emirates NBD bills itself as the leading banking group in the Middle East and North Africa. It has an SME market share of 24% in the United Arab Emirates (UAE), with approximately 65,500 SME accounts. SME products and services are provided throughout its 68 branches, including seven key business banking centers. The bank’s 100 SME business relationship managers offer SME customers a broad array of accounts, along with cash management, asset management, wealth management and trade finance services.

Emirates NBD has also built the E20. digital business bank specifically to grow market share by better supporting small-business customers through digital technology. A particular target of E20. is the more than 100,000 UAE microbusinesses that often go unserved because of minimum bank balance requirements. E20. enables SME customers to start, manage and expand their businesses. A small-business resource center is available, as are tools for accounting, cash flow, expense management, payroll, invoicing and collections. Analytics provide SMEs with insight into their customers and stakeholders.

The Royal Bank of Canada (RBC) earned the title of Best SME Bank in North America for its service and support of business banking clients throughout a truly turbulent 2020 and 2021. The bank partnered with the Canadian government’s various programs, such as the Business Development of Canada Co-Lending Program, Canada Emergency Wage Subsidy, and the Highly Affected Sectors Credit Availability Program, as well as RBC’s own Client Relief Program, to provide businesses with much-needed emergency liquidity. The bank’s investment in advanced technologies like machine learning also paid off.

RBC additionally took steps to support cultural entrepreneurs through its launch of its RBCxMusic initiatives, which provided stipends and promotional support for early-career musicians and recording artists.

Barclays is named Best SME Bank in Western Europe. With £1.3 trillion (about $1.8 trillion) in total assets as of the 2020 annual report, it’s one of the largest foreign banks operating in continental Europe. The UK-based bank has created a £14 billion new lending fund to support SMEs and offers a range of services, including clinics and webinars, to help SMEs manage their operations. Barclays also has partnerships with a variety of vendors that provide SMEs with services like pensions and asset finance.

As SMEs have struggled with the pandemic, the Back to Business program, sponsored by Barclays in partnership with Cambridge University’s Judge Business School, opened to SMEs regardless of whether they have a preexisting relationship with the bank.

The bank supports startups through an accelerator program focusing on fintechs. Recently, the bank also established Eagle Labs to help entrepreneurs scale and grow their startups. By working with Barclays experts, these startups become better equipped to stimulate local economies.

Barclays has had a presence throughout Western Europe for about a century and provides support to SMEs in these countries. SMEs can take advantage of some advisory and accelerator programs and access other SME services such as financing opportunities.