DFI was privileged to spend some time with Lito Villanueva, President & CEO of FINTQ, a FinTech company of Voyager Innovations in the Philippines on the 31st of May this year.
Lito leads the crew at Voyager who are responsible for the very successful digital consumer loans platform Lendr.
What did we learn from this call?
Traditional lending is an arduous and cost consuming exercise for most banks and traditional financial lending institutions. Since the introduction of digital loans in the Philippines, the customer loan experienced has been significantly improved and this in turn has led to a meaningful increase in the number of loan transactions.
Interest rate impact:
Prior to digital lending, the interest rate offered in the Philippines was around 15 – 16%, the introduction of a digital loans platform however, has had a direct impact on the lending rate in the Philippines where it has now come down to 10.5%.
Reductions and savings are due to the much leaner operating model and customers are reaping the benefits in the form of decreased interest.
A supportive Regulator makes a big difference:
Regulators in the Philippines, Indonesia and Vietnam have so far been reacting very positively to digital lending and has created a very enabling environment for digital lending.
The regulator in the Philippines is very supportive of this disruption and has in fact, put its weight behind Voyager and its platform post the successful implementation at Landbank during the course of 2015. The annual report published by the Filipino regulator shows an increase of 16% of family loans at banks YoY vs 10% YOY prior to introduction of digital lending.
Loan processing time has been drastically reduced. Before the digital lending platform was introduced, a loan application took approximately 2 weeks to process. Now customers can apply in real time to get actual cash approved and credited to their accounts as fast as the next banking day. This is viewed as as instrumental facilitator and enabler to greater financial inclusion in the Philippines.
Digital lending channels could overtake manual channels for consumer credit in the Philippines in the next few years. It is crucial to educate new borrowers about their financial responsibilities towards loans. Despite the sound profiles created through data analytics, there is no fool proof credit scoring facility in place and financial literacy is still a key element in the roll out of digital lending.
Lito, we at the DFI would like to thank you for the valuable time spent with us. We know you have enough to do!
For those who have missed the call, you can listen to the recording:
Should you have any further questions related to the webinar, feel free to post them to this Insight. We will engage with Lito and post answer for the benefit our or peers here as well.
By Susan Fouché