DIGITAL consumer lending firm AsiaKredit expects 50% growth in its disbursed loans this year as it banks on responsible lending practices.
Michael Ashwin S. Singh, co-founder and chief executive officer of AsiaKredit, said in an interview that the online lending platform eyes to end the year with 100,000-150,000 in loans issued.
“We process 100,000 applications a month and we expect to grow this year by about 50% versus last year in terms of loans issued or disbursed,” Mr. Singh told BusinessWorld.
AsiaKredit issues short-term consumer loans ranging from 30 days to six months through its mobile application “pera247,” targeting the low- to middle-income market segments with no formal credit or banking history.
The digital lending platform started doing business in October 2017 after receiving its license from the Securities and Exchange Commission. Mr. Singh said the firm launched its operations banking on the country’s high smartphone penetration rate, robust economic fundamentals, and large unbanked population.
“This population needs access to credit, and they’re using their digital devices. That was perfect for us because we do our credit underwriting based on digital usage or footprint,” he said.
The mobile lending platform eyes to capture more clients by partnering with more merchants and relying on positive reviews from clients.
“To access larger markets, we need to reach out to more partners and treat our customers with respect. We rely on word of mouth and by treating them with respect, we will become one of the preferred digital lenders,” Mr. Singh said.
He added that AsiaKredit separates itself from other lending companies by adhering to responsible lending and collecting practices.
In May, the National Privacy Commission begun looking into 48 online lending applications that have been subject to harassment complaints of allegedly shaming clients with delinquent accounts. These loan platforms supposedly required access to a user’s contact information and data stored on their smartphones.
“We want to be in the market, and the way to be successful in doing that is to make sure you take care of our reputation…by doing things right. Everything we do is aboveboard,” the chief executive said.
Mr. Singh added that AsiaKredit abides by ethical practices in terms of handling delinquent accounts.
“We tell our customers — we make you tick several boxes — that if you are delinquent and unreachable for up to 72 hours, you give us the right to locate you through one of your contacts,” Mr. Singh said. “We give the delinquent customers some time to return our call. We notify them.”
He noted that when the company calls third-party contacts, they refrain from disclosing the purpose of the call and from using aggressive language.
“Our policies are simple and logical: treat the customer with respect; do not use aggressive, threatening or coercive language; develop a relationship with the customer that are in a delinquent phase, because that is the best way to make them come back,” Mr. Singh said.
AsiaKredit targets to capture unbanked and underserved Filipinos by gradually introducing services to them.
“For example, our short-term loan with a high interest rate. If you pay that product and prove to be a successful player, we graduate you to a cash loan product, which carries a more mainstream interest rates similar to credit card rates,” Mr. Singh said.
He added that this credit history will help clients access other banking services so they can eventually be included in the formal financial system.
According to the latest Financial Inclusion Survey conducted by the Bangko Sentral ng Pilipinas in 2017, only 22.6%, or some 15.8 million Filipino adults, maintain formal bank accounts, citing lack of money and lack of need to have an account as the main reasons.
Over the next five years, AsiaKredit targets to capture a million customers and grow its portfolio to $500 million, as it aims to exit the pilot stage as early as the fourth quarter of this year.
“Right now, we’re still very small since we’re on pilot. We’re still building our scorecard and partnerships,” Mr. Singh said.
“Probably by Q4 of this year, (we’ll be out of the pilot test) since we’re still testing our two new products. But definitely in 2020, we’ll be rolling out and scaling.” — Karl Angelo N. Vidal