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Dana Fintech and Merchant Bay Partnership and Embedded Finance

Dana Fintech, a Dhaka-based fin-tech startup, and Merchant Bay, a B2B commerce company focusing on the RMG sector, announced yesterday that two companies have entered into a partnership to enable digital lending for SME RMG factories. 

The partnership will enable Merchant Bay to generate business credit scores of SME RMG factories on its platform using Dana's embedded lending engine and help these SMEs access digital SME loans and other financing facilities through partner banks. 

Merchant Bay runs a B2B ecommerce platform that helps SME RMG factories with sales, marketing, order management of apparel, and other relevant services. The company claims it has over 300 SME RMG factories on its platform. 

Digital platforms are increasingly looking into bundling services. Merchant Bay is apparently following the same path. It already provides several services to these SME RMG factories. Since it closely works with these SMEs and has access to part of their sales data, it makes sense for the company to bundle financing services. 

Dana Fintech enables digital platforms and banks to offer digital loans and BNPL to SMEs and individuals. Platforms and partners can integrate Dana’s embedded lending API such as credit scoring API, BNPL engine, and digital underwriting engine to generate data about user behavior and let the merchants and users apply for digital loans. The company says it is currently working with two leading commercial banks and three network partners.

Theoretically speaking, Dana’s lending engine will allow Merchant Bay to analyze transaction data of SME factories on its platform and generate credit scores which then can be used by banks to check the creditworthiness of these factories and sanction loans. Dana positions itself as a technology solution provider to launch services like BNPL and digital landing. 

Many ecommerce companies and digital platforms serving both B2B merchants as well customers are now looking into exploring services such as lending and buy now pay later. 

Dana looks to capitalize on that demand in the market and enable companies to execute their financial products ambitions. For companies and platforms, it makes sense in that they don’t need to invest in building fin-tech to execute their fin-tech ambitions. The challenge for Dana will be data requirements and access for building metrics like credit scoring and BNPL as well as building credibility in the market. Many platforms might prefer to have control over data and tech. Having said that these are the early days of embedded finance in Bangladesh, let’s see how the market evolves. 

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