How a non-bank financial credit company changed consumer lending?

How one of the first non-bank financial credit companies in Vietnam changed consumer lending?

With the rapid growth in the Vietnamese consumer finance industry, the demand for seamless and pleasing customer experience is increasing, hence the need for innovation is felt more than ever.

The consumer lending industry in Vietnam has been seeing remarkable growth. According to a report by the National Financial Supervision Commission, which advises the prime minister on matters related to the financial markets, consumer lending in Vietnam has been growing fast since 2015, with growth rate at 65 per cent in 2017, far faster than the 50.2 per cent in 2016, and with the percentage of consumer lending in total credit rising to 18 per cent in 2017 from 12.3 per cent in 2016.

In this context, various players, both domestic and foreign, are eyeing a slice of the market. Banks and corporations have opened their consumer credit units and many foreign consumer credit companies have come to Vietnam, either setting up greenfield ventures or acquiring existing players. However, even with so many players in the market, the consumer experience still leaves much to be desired.

FE Credit, originally founded as the Consumer Finance Division of Vietnam Prosperity under Vietnam Prosperity Joint-Stock Commercial Bank, was established in 2010 and is one of the early players in the market. As of 2018, FE Credit has served over 10 million Vietnamese customers across 63 provinces and cities nationwide, with a wide range of products consisting of personal loans, consumer durable loans, two-wheeler loans, credit cards, and insurance.

In China and India, many consumer lending companies have launched a digital process of loan application, approval, and disbursement, allowing customers to receive their money in only 10-15 minutes. FE Credit recognised that if it can provide a similar process in Vietnam, the benefits would be two-fold – customers will gladly adopt the FE Credit app, and the cost of operation for FE Credit will be reduced.

The lending platform for the $NAP app was created by integrating through APIs a host of digital technologies and fintech solutions on a flexible workflow solution guided by a versatile rule engine. It combines new technology with traditional lending science without any compromise on KYC, verification, underwriting, compliance, or customer service.

The platform digitises the entire customer journey (or lifecycle) from application through mobile device to receiving disbursal through bank account or retail outlets (in cash) and allowing them to service the loans up to termination through the same device. This eliminates human intervention at all stages of the lifecycle, as opposed to only onboarding. The technologies incorporated on the platform, beyond the ability to support Vietnamese language and script, include features such as facial recognition, AI-based optical character recognition (OCR), voice-based virtual assistant, speech to text, device-based scoring, telco data scoring, eSignature, and more.

Though the EY team had experience in launching a similar digital lending app in India, the challenge in Vietnam was unique as most documents required in the lending process, namely ID, utility bills, and pay slips, are still stored in paper form.

Over the course of four months, the EY team from India advised FE Credit on industry best practices in application design, vendor selection, and prototyping.

$NAP was launched in August 2018, enabling customers to fill out a loan application, receive approval, and disbursement within 24 hours. As of May 2019, the app had over one million downloads. FE Credit is leading the pack in acquiring customers at a speed never imagined before.

By eliminating traditional paper-based application and face-to-face KYC procedures, this platform decreased the risk of losing a lead due to inconvenient and time-consuming procedures, and thus reduced the cost of acquiring and on-boarding customers for FE Credit.

The ASEAN Financial Innovation Network (AFIN) initiative of the International Finance Corporation (IFC) has recognised the 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. In addition, the FE Credit platform can integrate with the AFIN platform when the latter is ready.