Three financial gurus set out to redefine lending at fintech show
Digital lending could play a significant role in alleviating Thailand's massive household debt and strengthening the country's financial services through better balancing and responsible practices, three experts from leading technology and fintech companies told a panel discussion on Wednesday.
Google Cloud Thailand head of enterprise Charn Ariyaku, MoneyDD managing director Sirinun Jiradilok, and Mambu country manager (Thailand) Woratep Yunyongku were speaking during the “Redefining Lending in Thailand” talk at Money 20/20 Asia, the world's largest fintech show.
Their focus was on the future of Thai financial services and how embracing digital lending could help traditional banks and newcomers thrive in today's digital economy.
Amidst the country's current high household debt, the three agreed that digital lending provides banks and related businesses with stability, flexibility, and agility to excel in lending while meeting two future requirements of Thailand's financial services: balancing economic recovery and lending with responsible practices.
Charn from Google Cloud said that having a strong digital lending system would require secure and resilient digital infrastructure with the integration of Cloud and generative AI to help businesses reach potential customers.
Citing Thailand's infrastructure readiness and the fact that more than 54 million smartphone users are already familiar with digital payments, he noted that it was now up to businesses to develop products to meet lending demand.
He praised the Bank of Thailand for expressing enthusiastic backing and providing guidelines for using technology to support new financial services while protecting data privacy and reliability.
Sirinun from MoneyDD added that another important factor in strengthening the country's digital lending was to educate customers about the benefits of digital lending.
Given that digital lending has the potential to be a powerful tool for promoting financial inclusion, Woratep of Mambu urged providers to be well-prepared with a cost-effectiveness strategy to run a profitable operation.
He emphasised that digital lending cannot charge high interest rates and pointed out that technology such as generative AI would help save costs while improving efficiency and meeting customer expectations.
According to researchandmarkets' "Asia Pacific Alternative Lending Market Business and Investment Opportunities Databook", which was published in December 2023, digital lending in Asia Pacific is expected to grow by 15.1% per year, from US$256.3 billion in 2022 to $422.6 billion by 2027.
Data are key
Although digital lending contributes significantly to improving financial inclusion in Asia and Thailand, lenders in these countries require diverse, high-quality, and secure data to mitigate risks and specify personalised solutions to provide inclusive, transparent, and credible services that benefit both lenders and end-users.
According to credolab.com, approximately 1.4 billion people in the APAC region will remain unbanked in 2023, despite fintech and emerging technologies contributing to financial inclusion. Roughly 70% of Southeast Asia contributes to this figure, with Indonesia and the Philippines accounting for the majority, as well as up to 63% of adults in Thailand who are unbanked or underbanked.
However, with the rapid growth of fintech and digital lending in the APAC region, particularly in the ASEAN countries, the number of financial inclusion continues to rise.
Still, there are many challenges to overcome in expanding inclusion to more underbanked groups, and data are key.
A recent survey by Millimetrics.ai found that 65% of the organisations polled said they have too much data to handle and that 73% of the data collected is unused.
The issue of data was address by three experts from the region's credit bureaus and data analytics firms in the panel discussion on "The Power of Data: Driving Financial Inclusion in ASEAN" on Thursday.
TransUnion managing director Wingo Wong, National Credit Bureau deputy president Phadet Charoensivakorn, and Mina Intanate, chief operating officer of Business Online shared their thoughts on how to use data to reach out to underbanked or unbanked communities.
TransUnion managing director Wong suggested that lending providers consider categorising alternative data on a person's credit, such as consumer behaviour, in addition to conventional data. This type of data would assist a company in exploring potential solutions to ensure that an individual has access to a proper loan and the ability to repay his or her debt.
Furthermore, he pointed out that data on behaviour can reflect debt capacity and source of income, as many of the new generations are currently self-employed.
Thailand's National Credit Bureau deputy president, Pradet, agreed with Wong. He encouraged financial institutions and other digital lending providers to expand their data sources to diversify their own databases.
Meanwhile, he advised businesses to strike a balance between data innovation and data security, noting that credit information is classified as highly confidential. The first priority, therefore, is security.
Referring to international security standards and compliance could be a useful shortcut while a company develops its own innovations, he added.
COO Mina of Business Online pointed out that when discussing financial inclusion, borrowing companies should consider their ability to increase their worthiness through ESG (Environment, Social, and Governance) practices in addition to their financial report.
All three experts agreed to work with related parties to improve individual financial literacy, allowing people to manage their financial difficulties.
