Digital lenders in Mongolia receive a boost from global investors

Mongolia, a country characterized by its vast, sparsely populated landscape, is on the cusp of a financial revolution, driven by digital lending and supported by significant international investment. This new era promises to bridge the long-standing financial access gap for individuals and, more importantly, for small and medium-sized enterprises (SMEs) that form the backbone of the Mongolian economy. Recent funding announcements highlight a growing confidence among global investors in Mongolia’s fintech sector.

The International Finance Corporation (IFC) has made its first equity investment in Mongolia in over a decade, providing US$7 million in a Series B round to the fintech firm AND Global. This strategic investment aims to bolster digital lending and create jobs by expanding access to finance for small businesses.

Through this partnership, AND Global will scale its technology arm, AND Solutions, which develops critical products like credit scoring, document processing, and lending systems used in 11 countries. The funding will also strengthen its local lending platform, LendMN, which is listed on the Mongolian Stock Exchange. LendMN is a major player in the country, serving over 1.3 million registered users, a figure that represents more than 80% of Mongolia’s economically active population. Furthermore, the IFC will provide guidance on crucial areas such as corporate governance, risk management, and responsible lending practices.

In a separate deal that underscores investor confidence, LendMN secured US$20 million in debt financing from Lendable, a firm focused on digital financial inclusion in emerging markets. This is the largest capital raise by a Mongolian fintech to date.

The funding will allow LendMN to scale its mobile-first lending platform and improve credit access for underserved businesses. Since its launch in 2017, the platform has disbursed approximately US$70 million to around 3,800 small businesses, with an average of over 600 daily applications. In 2024, the company introduced the Flexi Business Loan, Mongolia’s first fully digital, unsecured loan for MSMEs. This investment reflects a broader trend of growing investor interest in digital lending models tailored for frontier markets.

The momentum in Mongolia’s digital lending sector extends beyond AND Global and LendMN. In a related initiative, the IFC is providing up to US$30 million in financing to M bank, Mongolia’s first branchless, digitally focused bank. A significant portion of this funding – 25% – is specifically earmarked for women-owned SMEs. This partnership is part of the IFC’s broader effort to create an inclusive and sustainable financial sector in Mongolia.

SMEs, many of which are women-owned, account for about 70% of the country’s workforce. Despite their importance, access to formal financing remains limited. Data shows that nearly 90% of registered businesses in Mongolia are SMEs, but only about 10% regularly access bank financing. This highlights a considerable financing gap and the immense potential for digital solutions to fill this void. The World Bank’s 2019 Enterprise Surveys found that 31% of Mongolian firms face full credit constraints, a figure well above the regional average.

These recent investments by the IFC and Lendable are a testament to the transformative power of fintech in addressing financial exclusion in emerging markets. By leveraging technology to provide seamless, accessible, and instant financial services, companies like LendMN and M bank are not just providing loans; they are empowering businesses, fostering job creation, and contributing to economic growth. The partnerships with global institutions like the IFC will not only inject much-needed capital but also introduce international best practices in areas like corporate governance and responsible lending, paving the way for a more robust and sustainable financial ecosystem in Mongolia.