SME Innovation Lab: Catalysing Inclusive and Scalable Financing for CMSMEs in Bangladesh
The SME Innovation Lab is Bangladesh’s first impact-driven collaborative platform dedicated to addressing systemic barriers in financing for Cottage, Micro, Small, and Medium Enterprises (CMSMEs). Established by BRAC Bank in partnership with ecosystem stakeholders and funded by KFW DEG and BMZ, the Lab brings together financial institutions, technology providers, development partners, and innovation actors to co-create practical solutions that improve access to finance for underserved enterprises. Through experimentation, digital innovation, and ecosystem collaboration, the initiative aims to pilot and scale sustainable financing models that can strengthen entrepreneurship and economic inclusion across Bangladesh.
Five-Axis Transformation via the SME Innovation Lab
Data
The Lab begins with systematic assessments of challenges faced by CMSMEs, identifying key financing gaps and operational constraints. Through research, problem-statement development, and pilot testing, the platform generates insights on enterprise needs, financial behaviour, and scalable solutions that can inform improved financial product design.
Capacity Building / Technical Assistance
Participating enterprises receive structured support through bootcamps, mentorship programmes, and technical guidance. These activities help businesses formalise operations, improve bookkeeping practices, develop realistic cash-flow projections, and design sustainable growth strategies that enhance their creditworthiness and investment readiness.
Technology / Machinery
The initiative leverages digital technologies and fintech innovations to improve financing access and operational efficiency for small enterprises. By piloting digital financial solutions and innovation-driven platforms, the Lab aims to modernise CMSME financing systems and enable scalable service delivery across the financial ecosystem.
Finance
At its core, the programme focuses on developing innovative financing models that address structural barriers in CMSME lending. Through collaboration with financial institutions and development partners, the Lab pilots new credit products, risk-sharing mechanisms, and financing approaches that can expand credit access for last-mile enterprises and underserved entrepreneurs.
Policy
The platform contributes to broader ecosystem development by generating lessons from pilot initiatives and facilitating dialogue among policymakers, financial institutions, and development actors. These insights help shape more inclusive financial policies and strengthen national efforts to integrate cottage and micro enterprises into the formal economy.
Strategic Impact & Value Proposition
Expanded Access to Finance for Underserved Enterprises
By piloting new financial products and innovative lending models, the initiative aims to unlock credit opportunities for CMSMEs that traditionally face barriers to formal finance.
Strengthened Entrepreneurial Capacity
Through mentorship, training, and business development support, participating enterprises build stronger financial management practices and operational capabilities.
Innovation-Driven Financial Ecosystem
The Lab fosters collaboration among banks, technology firms, development organisations, and ecosystem enablers to co-develop scalable solutions for inclusive finance.
Promotion of Gender-Inclusive and Climate-Resilient Financing
The initiative prioritises solutions that address gender financing gaps, promote climate-resilient enterprises, and support sustainable economic activities within the CMSME sector.
Scalable Models for National Impact
By testing and refining innovative financing approaches, the Lab aims to create replicable models that can be scaled across Bangladesh’s financial sector to support inclusive economic growth.