Digital first, rural always: How Khan Bank is scaling inclusion across Mongolia

A digital engine for scale 

If branches are the roots, digitization is the growth engine. Over 70% of Mongolia’s population is under the age of 35 years. In the last three years, Khan Bank shifted routine activity online: 

“More than 99.4% of our payments and transactional business is happening in the digital channels. In 2021, only 2% of our loans were taken online. Now, almost 85% of consumer lending – as well as micro-business loans up to $30,000 – you can have online.” 

The branch role has evolved accordingly. “We turned some branches into SME centers with knowledgeable relationship managers and staff,” Degi adds- 42 business centers in total, spread across Mongolia’s aimags/provinces, and Ulaanbaatar.  

To reach entrepreneurs beyond city limits, Khan Bank also launched “Erdem” – a free knowledge app with 500+ content items – soft skills, hard skills, and financials – so clients can learn remotely. 

MSMEs at the core 

Small firms are central to the loan book: 

“MSME businesses account almost 35% of our total portfolio… 50% is consumer lending including mortgage and another 50% is business lending. On that 50%, 35% is the small and medium enterprises.” 

Training complements finance. Through the SME Academy, established in the late 2000s, the bank annually trains more than 3000 entrepreneurs, with a current emphasis “on making businesses greener.” There are also other subjects like marketing, HR, and leadership.  

With the support of Incofin and other impact investors, the bank annually trains more than 700 women entrepreneurs on how to make their businesses grow. As examples, see the stories of a dentist and an egg farmer.  

Closing gender gaps in access 

Degi, as a business leader herself, is blunt about both the opportunity and the gap: “More than 60% of small businesses in Mongolia are owned by the women entrepreneurs… but at the bank, 14% of our business portfolio includes women entrepreneurs.” 

To move the needle, Khan Bank has now designed products to meet women where structural barriers exist: 

• Digitalization grant: “If the woman uses digital solutions in her business, she can have technical assistance up to $10,000 – which is 10% of the total loan – she can get this as a grant,” the leader explains. Eligible uses include e-commerce upgrades, ERP/accounting software, computers, automation, and ways to make financial reporting more transparent. 

• Collateral flexibility: Recognizing that homes and assets are often not registered in women’s names in Mongolia, the bank has “eased the collateral requirement for the woman,” improving eligibility for small borrowers.

Financing climate resilience and impact 

Mongolia has pledged to reduce greenhouse gas emissions by 22.7% by 2030. Today, the country produces about 60 million tons of greenhouse gas emissions per year. The national sustainable finance roadmap sets a target for banks: 10% of total loans should be green by 2030. Khan Bank is pulling that deadline forward: 

“Khan Bank aims to reach this 10% target by the end of 2026,” Degi states.  

A 2023 green bond created a framework across seven areas-renewable energy; energy efficiency (>20% savings); green housing; clean transportation; waste and water management; pollution prevention – to channel capital into decarbonization.  

Results are visible in portfolio composition: 

“Our green loan portfolio is almost MNT 1 trillion, which is about 7.4% of our total loan. Our market share in green lending is more than 50% now.”  

Last year, the bank also issued the first gender bond on Mongolia’s capital market – “very well received by local investors” – with clear eligibility rules: ≥51% women ownership, or 20–50% ownership with a woman at C-level. Proceeds from the bond support woman entrepreneurs.