PETALING JAYA: Financial inclusion through alternative financing via fintech players is regarded by Malaysia Digital Economy Corporation (MDEC) as an integral piece in small and medium enterprises’ (SMEs) digitalisation push.
According to its fintech & Islamic digital economy division vice-president Norhizam Abdul Kadir, the agency has a big agenda when it comes to narrowing the digital divide through upskilling initiatives, grants, education, e-commerce platform onboarding offered for SMEs.
“As micro SME obtains these skills, they would need to have financial support and they might not necessarily be able to get support from the conventional financial institutions,” he said at MDEC’s SME Digital Summit panel discussion on ‘Alternative Financing for SMEs’.
“In order for us to continue our digital inclusivity agenda, the focus on financial inclusion needs to be further emphasised.”
In order to achieve that goal, Norhizam said, MDEC has collaborated with fintech players to come up with alternative, accessible and affordable solutions for SMEs.
Despite the complications relating to assessing credit risk, particularly fpr micro SMEs without much credit history, Axiata’s micro financing platform, Aspirasi has disbursed about RM120 million in Malaysia, from about 20,000 loans.
Furthermore, Aspirasi’s executive director, Anthony Sheyantha Abeykoon, shared that 60% of its customers have never taken a loan before.
He said Aspirasi, being part of Axiata, is fortunate to have a captive ecosystem of customers it could access almost immediately when it took off two years ago.
“Our credit scoring is broad based, for customers with some credit profile we do access their credit profile, while for the customers that are completely new to credit, we usually base it on transaction and profile data that we have within our ecosystem,” Anthony said.
With providing loans to those without credit history, the executive director shared that Aspirasi took a very careful approach at the beginning, starting with a very stringent criteria and opening up gradually when it had a sufficient track record.
However, peer-to-peer financing platform Microleap took another approach.
Its COO, Matthew Noel Fernandez, disclosed that it employs psychometric testing to assess a customer’s willingness to pay rather than focusing solely on their ability to pay, and this information is fed its proprietary credit algorithm to come up with a score.
He pointed out that Microleap has video training on basic management accounting training for its customers.
“So they go through these modules and from there they can upskill themselves and are able to handle their financing,” said the COO.
Overall, Norhizam noted that Malaysia is on good standing in terms of banking population, but highlighted that there are also a large chunk of Malaysian who are underserved with no clear budget planning and no clear future sustainability, while 6 out of 10 Malaysian adults are self-employed or working for SMEs with no proper formal retirement and pension system.
“We look at this as an opportunity for fintech players to address Malaysia’s financial inclusion, MDEC looking at the bigger picture, to achieve sustainable growth along with fair and equitable distribution,” he said.
Source: https://www.thesundaily.my/business/mdec-financial-inclusion-via-fintech-players-an-integral-piece-in-smes-digitalisation-push-AY3463299