AsiaKredit pushes into consumer finance

  • Aims to enable underbanked middle class to receive larger-ticket, longer-term loans
  • The digital consumer finance fintech has raised US$2.5 million in funding to date

 

The AsiaKredit team in Manila, led by CEO/co-founder Michael Singh (centre)

SINGAPORE-headquartered AsiaKredit, a digital consumer finance fintech, announced its entry into mainstream consumer finance in the Philippines with the launch of a suite of digital installment loan products for the underbanked middle-class.

This includes ShopaLoan, a sales finance product enabling consumers to shop and finance their purchases at participating household/homeware/consumer goods merchants on installments set up at the point of sale; and AffordaLoan, an all-purpose cash loan product offering higher loan amounts on installments.

AsiaKredit has raised US$2.5 million in funding to date from investors that include SIG Asia Investments, FORUM, Fintonia Group, Reliance Indonesia Group and Space Ventures.

AsiaKredit co-founder and chief executive officer Michael Singh, said, “With product level profitability achieved on our first digital loan product launched in 2017, we are moving into the next phase of growth and are focused on serving the underbanked middle-class in the Philippines.

“We want to improve the lives of these consumers who are often overlooked by traditional banks and financial institutions, and for that to happen, they need affordable, longer-term credit that can be repaid in easy, fixed monthly installments. We will be rolling out more products for this segment over the next few months, including a digital revolving credit line.”

ShopaLoan provides low-interest, instalment-based credit for large household purchases from any of AsiaKredit’s participating retailers. After its brief pilot, AsiaKredit will aim to scale its merchant acquisition and partnerships.

Affordaloan enables young, educated, gainfully employed Filipinos - typically between the ages of 26 and 36 - to apply for loans ranging between US$190 and US$570. Consumers will be able to repay their loans in fixed monthly installments over a period of three to six months, and at low interest rates of up to 6%.

Both products are provided by pera247, the company’s mobile app that has been mainly extending smaller-ticket, short-term consumer loans for up to 90 days to unbanked and underbanked Filipinos with little to no credit history.

The company has been offering unsecured loans via its mobile app for over a year, delivering over US$3 million in loans (US$100-150 at a time) with a 50-70% repeat customer rate.

With the Philippine economy growing by approximately 6% annually since 2012, and expected to continue to do so for at least the next five years, a growing middle class has emerged, fuelling demand for consumption and credit to meet their improved living standards.

Coupled with widespread mobile internet usage (almost 86% use the internet via mobile devices), a growing number of middle-class Filipinos are ready to finance their expenses through mobile-phone app lenders.

AsiaKredit’s flagship technology is an algorithmic credit scoring tool that analyses smartphone behavioural data and other alternative data sources to determine credit-worthiness. As part of AsiaKredit’s credit assessment process, its pera247 app extracts a selection of traditional and alternative data points such as behavioural data from an applicant’s smartphone.

Using the AsiaKredit team’s proprietary digital technology and technical know-how, pera247 is able to incorporate highly predictive digital credit assessment into its underwriting algorithm to improve both the availability of  credit to those with limited or no banking history, as well as increase their approval rate, whilst reducing the cost of risk.

 
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