FE Credit’s effort to disrupt its own business model is starting to pay off

By utilising a number of different disruptive technologies, FE Credit have been able to stay ahead of the competition

Call of the future

While a number of its competitors have been quite comfortable launching mobile apps in recent years to respond to the digital era, FE Credit has gone the extra mile in employing cutting-edge technologies to transform its entire operation, from not only its front-end with products and services for customers, but also to the back-end where lending processes and administration works are all automated.

Such a digital transformation, according to Kalidas Ghose, vice chairman and CEO of FE Credit, is the company’s very responsive action to a sector that is maturing, ultimately it will help FE Credit gain market share.

The tale of FE Credit disrupting itself, as the CEO shared in a recent interview in Ho Chi Minh City, began early last year when he and his team fully deconstructed its existing business model. They then rebuild it with a design-thinking approach from the bottom up, turning itself into a totally digitised model in a bid to ultimately offer customers a lending experience on par with, or ahead of, other developed countries.

“We completely deconstructed the existing model to be able to identify the elements which are key in building the credit history or credit profile for customers to make a decision, and then went about searching for digital solutions that are available around the world and deciding to either use them on a pay-per-use basis, or a variable cost basis,” said Ghose.

“We then carefully strung them together to create a platform that is capable of delivering the best customer experience. That starts from the first interaction with customers on any of our channels, from the physical stores, direct sales agents, to our websites and mobile applications, and to any other channels where customers have an opportunity to contact us.”

Integrated automation

Today, customers can experience FE Credit’s fully-automated lending platforms including $NAP, which launched last year allowing customers to apply for a consumer loan via the convenience of their smart devices; the newly launched SHIELD app that enables customers to purchase insurance online; or the FE Card Mobile app that can act as a virtual credit card, helping holders spend at retail stores or withdraw money in areas where no ATM is available.

These front-end products are seamlessly supported by the company’s digitised back-end which includes robotic process automation. In addition, Big Data is also utilised to make better data drilling and therefore better and faster credit decisions, while its face recognition technology will smooth the customer identification process and enhance risk management.

FE Credit has also integrated Vymo, a sales productivity solution that uses Artificial Intelligence (AI) and process automation to improve sales productivity, drive higher conversions among sales teams, and reduce loan disbursement times.

“Our customers are on board with a sophisticated system that requires minimal, human intervention along their journey with us. In fact, human intervention on this platform is required only when the customer is facing a difficulty in continuing with the journey all by him or herself, and thus requires some assistance over the phone or sometimes in rare occasions, face-to-face, for completing that journey,” said Ghose.

Meanwhile, being a fairly large consumer finance company itself in an ASEAN region that processes around 25,000 loan applications on a daily basis, it would be highly disruptive for FE Credit to completely go digital all at once, according to the CEO.

The digital platform has thus been created in a laboratory environment, tested and put into practice in a phased manner, alongside the company’s traditional platform, with the complete transformation and migration to be completed within the next 12 months.

Regaining the crown

Getting ahead of the slower growth and entry of new rivals by investing in disruptive technologies seem to be a correct strategy that pays due rewards.

Ghose said that after getting all business aspects digitised, together with simplified processes that now make use of e-contracts and e-signatures, and even digital marketing campaigns capable of offering customised products for existing customers, FE Credit has been able to reach out to “almost triple” the number of customers that it used to reach via traditional physical channels like direct sales or telesales.

On the customer end, what customers get out of FE Credit’s automated lending products and services is a frictionless experience with faster turnaround time on personal loans, saved travel costs, and possibly cheaper loans thanks to lower operation costs that the company is able to save through its automated processes.

“Almost 10-15 per cent of those customers who have received customised information are actually clicking through this to download our app on the website. This leads to approximately 1 per cent of customers who are expressing interest to eventually take a loan disbursal. Having said that, we have seen dramatic growth in these rates over future months and we expect this to reach almost 4 or 5 per cent by the end of 2019,” said Ghose.

With the $NAP pilot campaign that ran from August to November 2018, FE Credit saw loan applications and

volumes significantly rise. On average, both applications and loan volumes on $NAP increased by 280 per cent each month. By the end of November, the number of applications reached almost 150,000, with the current volume adding up to about 2,000 applications a day.

For its automated lending products and platform, the company was also named among the Best Fintech Solutions at the Singapore Fintech Festival 2018. Furthermore, the ASEAN Financial Innovation Network, an initiative of the International Finance Corporation, also found FE Credit’s platform to be ready-to-use and highly suitable, replicable across markets by financial institution partners to complement their supply-side platform, according to Ghose.

Investment in technology

For instance GoBear, a metasearch engine for financial products, has partnered with FE Credit to exploit the latter’s automated lending platform, a move which allows the former to streamline its user journey and provide millions of local residents easier access to loans.

“Reaching further strengthened our risk management practice. We expect with the help of new products and services, widespread distribution, and also now, using digital platforms to make our products accessible to all customers, backed by a really strong risk management process, will ensure that our business continue to grow, as strongly as we have done in the past,” Ghose said.

Its credit card business, in particular, is gearing up to be the growth engine of FE Credit for the next five year, for which the company is targeting a credit card portfolio of 100,000 new cards a month and one million ones a month as a long-term vision.

According to Duong Nguyen, leader of Financial Service Organisations and IT Advisory Services at EY Vietnam, appropriate investment in technologies, especially those that help improve procedures, can help minimise or eliminate human errors and data loss while enhancing the efficiency of the lending system. At the same time, technology can also serve as a platform for consumer finance companies to reach out to rural areas to tap into the unbanked population and facilitate growth in the future.

Investment expenditure in digitisation at FE Credit, according to its CEO, has been “reasonably small”, sitting at around 0.1 per cent of its revenue and 0.3 per cent of its profits last year. To keep the tech costs down, the company has spent time and effort to design them and make the technologies available on a collaborative basis. “The technology that we have deployed is capable of reaching out to every citizen across the country and therefore, from an accessibility point of view, we do intend to use this technology to reach out to a wider segment of customers and every single individual in Vietnam,” said Ghose.

Its credit card business, in particular, as Ghose noted, is gearing up to be the growth engine of FE Credit for the next five years, for which the company is targeting a credit card portfolio of 100,000 new cards a month with a long-term vision to be the largest card issuer in Vietnam.