FE Credit reshapes Vietnam’s consumer finance industry with its disruptive “$nap” digital lending platform
The consumer lending industry in Vietnam has been seeing remarkable growth. According to the National Financial Supervision Commission, consumer lending in Vietnam has been growing fast since 2015, with growth rate at 65% in 2017 compared to 50.2% in 2016, and with the percentage of consumer lending in total credit rising to 18% in 2017 from 12.3% in 2016. In this context, various players, both domestic and foreign, are eyeing a slice of the market. Banks and corporates have opened their consumer credit branches, and many foreign consumer credit companies have come to Vietnam, either setting up greenfield ventures or acquiring existing players.
With so many players in the market, the consumer experience still leaves much to be desired. Even though Vietnamese customers are tech savvy (84% of the population were smartphone users at the end of 2017), the process of acquiring consumer credit is mostly manual and time consuming. The typical process easily takes up to 4-5 days including many steps for example: (1) a customer files an application for loan either online or offline; (2) he then submits paper documents to the credit company; (3) The company then conducts the underwriting process, which requires telephone verification and/or customer visits and thus usually takes 1-3 days before a decision is made; (4) The customer then has to sign a paper contract with the company, and (5) only after all this is done, the lender sends the money to the customer’s bank account or asks him to visit their outlets to collects cash.
CREDIT is the first-mover in the Vietnamese consumer lending market to deploy an end-to-end digital lending platform. This new platform, suitably named $NAP, which requires zero human intervention at the backend, allows a complete digital process of loan application, instant approval and immediate disbursement, taking only 10-15 minutes for customers to complete the process and receive the money within a couple of hours. Thus, it drastically increases its appeal to customers, while mitigating challenges faced by the traditional lending model.
So how did FE credit “crack the code”?
Partnering with some of the best FinTechs around the world, FE CREDIT has employed new technologies to develop this end-to-end digital lending platform to help it deliver the best customer experience and align with its corporate mission of delivering fast and easy credit.
The technologies incorporated on the platform after meticulous localization, including but not limited to Vietnamese language and script, Selfie based Facial Recognition, AI-based Optical Character Recognition (OCR), Voice Based Virtual Assistant, Speech to Text, Device Based Scoring, to Telco Data Scoring, eSignature, and more. Deploying this vast array of technologies required extremely sophisticated “design thinking” at the outset.
According to Mr. Nguyen Thien Tam, Innovation Center Director of FE CREDIT: “FE CREDIT has leveraged the power of technology to reach out and provide customers with an exciting experience, while solving customer’s pain points.”
The challenge in Vietnam was unique as most documents required in the lending process, namely ID, utility bills and pay slips, are stored in paper form, and there is no centralized digital data archive available (unlike some other countries e.g. Singapore). To overcome this challenge, $NAP uses Optical Character Recognition (OCR) and Intelligent Character Recognition (ICR) to verify the customer’s identity and authenticate documents submitted by customers using their phone cameras.
CREDIT also deploys Selfie Face Recognition, biometric software for its auto credit assessment and enhances Know Your Customer (KYC) process. It uses applicant’s selfie photo to query their data and process credit assessment accordingly. Face Recognition is not only relevant for storing customer information, but also helps to save time and manual effort for credit assessment and towards minimizing frauds.
As this is the first and only app of its kind in Vietnam, all templates had to be designed from scratch. Moreover, as customers in Vietnam have never used such an app before. FE CREDIT kept in mind constantly that the app has to be very simple, self-explanatory and intuitive.
Promising early results
FE CREDIT commenced a pilot campaign for $NAP from August 2018 to November 2018, and saw that the application and loan volume increased significantly during the period. On average, both application and loan volume increased by 280% every month. By end of November, the number of loan applications has reached almost 150,000 and current volume is about 2,000 applications per day.
The App stability increased from 58% during pilot stage to over 97% to date. This is perhaps one of the best levels of stability for an App that is only 4 months old. FE CREDIT expects it to be 99% always available by Jan 2019.
Our relentless pursuit of excellence
By eliminating traditional paper-based application and manual underwriting process, this platform decreased the risk of losing potential customers due to inconvenient and time-consuming procedures, and significantly reduced the cost of acquiring and on-boarding customers for FE CREDIT.
FE CREDIT now has a first-mover advantage in the Vietnamese consumer lending market. Moreover, by using AI algorithms and KYC insights to further analyse the target segment, FE CREDIT has successfully penetrated the unbanked market understanding its customers’ needs and wants.
The company is now working with some of the leading new-age lenders to bolt on to the platform as white label partners, giving them access to Vietnam while offering more options for inclusion which would not be possible without the platform.
Mr. Kalidas Ghose, Vice Chairman and CEO of FE CREDIT, proudly shared: “At the event Singapore FinTech Festival 2018, the World’s largest FinTech event that attracted over 40,000 attenders in 3 days, FE CREDIT was honoured to be recognized as Best of the Best FinTech solutions.
FE CREDIT was also the only Vietnamese consumer finance company featured in the API Exchange launched by Deputy Prime Minister of Singapore Tharman Shanmugaratnam and Indian Prime Minister Narendra Modi. The ASEAN Financial Innovation Network (AFIN) initiative of the International Finance Corporation (IFC) found FE CREDIT’s platform to be a ready-to-use, highly suitable demand-side use case replicable across markets by partner financial institutions to complement their supply-side platform.
The platform has contributed to a successful year for the company and helped it win a number of noteworthy and respected international awards including: Most Innovative Consumer Finance Brand in Asia 2018 granted by Global Brands Magazine; Best Consumer Finance Company in South East Asia 2018 awarded by Global Business Outlook and Top 10 Asia Pacific Outstanding Brand 2018 conducted by Asia Pacific Economic Review.”
Bright outlook for 2019
“Customer is the centre of our Universe. Our single minded agenda is: how can we make the lending experience faster, easier and better for our customers. This is our DNA,” said Mr. Basker Rangachari, CMO of FE CREDIT.
FE CREDIT is working on the possibility of extending its lending services to the rural areas, to add to its urban and suburban presence. The company has recently extended the platform to device-based account management, with a merchant module capable of accepting payments from the credit lines of FE CREDIT’s individual customers. The move opened up the opportunity to bring the 5 million plus micro-merchants that control 90% of retail in Vietnam under organized finance through digital payments. With all these moves, FE CREDIT aims to create a mobile-centric, digitally driven financial ecosystem driving financial inclusion and support economic progress by driving the wheels of domestic business, both on the supply and demand sides.
FE CREDIT is successfully continuing on its path in creating a world class consumer finance franchise with a significantly large customer base in Vietnam by maintaining its momentum of strong growth through 2017 and 2018. It remains a market leader by far with over 50% of the share of consumer finance in Vietnam as per published reports. With increasing competition, the consumer finance market in Vietnam will surely transform in the coming years. As the market leader, FE CREDIT will continue to drive its pioneering spirit by continuously setting new standards in the application of FinTech and prove that it does not only adapt to the changes, but will lead the revolutionary change in the industry.