Mongolia

Digital banking has been a big hit in this big country that has barebones infrastructure and a high level of smartphone penetration. A decade ago, most bank transactions were done in the branch; now, that share is below 10% and falling. Disruptive fintech firms are pushing into the sector, forcing traditional banks to up their game.

A decade ago, private banking was all but unknown in Mongolia. Now, virtually every bank has at least one gleaming office in the capital, dedicated purely to serving the wealthy and their dependants. Golomt Bank offers an expanding repertoire of private banking services, as does the country’s biggest lender, Khan Bank, whose Priority and Signature services, launched in 2010, cater to more than 35,000 customers.

Mongolia’s big financial institutions are defined almost by design. All are full-service lenders, but while Khan Bank specializes in retail lending and XacBank in serving SMEs, two other outfits – Golomt Bank and Trade and Development Bank of Mongolia – lavish their attention on Mongolia’s big corporates.

It would be hard to find a part of this vast frontier state that isn’t served by Khan Bank. The former agricultural lender is the country’s best and most-rounded financial institution by a long shot.

Anar Chinbaatar is wreaking havoc: local banks are running scared of LendMN, a digital payday lender that has disbursed 600,000 loans in just 18 months. The serial tech entrepreneur now plans to transform LendMN into a real digital bank – and take on Asia. Few would bet against him.

China’s big lenders, led by Bank of China, want full access to Mongolia’s resource-rich market, but local regulators are desperate to keep them out, wary of Beijing’s rising power and influence, and keen to avoid a repeat of past mistakes. Who will win the battle?

Mongolia began 2017 facing yet another credit crisis. It ended the year clutching a massive IMF-led bailout to reform the central bank, eradicate related-party lending and create a thriving modern banking sector. So much for the theory – now the hard work starts.