How a non-banking credit firm changed Vietnam consumer lending

It is its ability to provide good services to customers using technology solutions that has made FE CREDIT a market leader.

The consumer lending industry in Vietnam has seen 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 a growth rate at 65 percent in 2017 compared to 50.2 percent in 2016, and with the percentage of consumer lending in total credit rising to 18 percent in 2017 from 12.3 percent in 2016.

In this context, various players, both domestic and foreign, are eyeing a bigger slice of the market. Banks and corporates have opened consumer credit units, and many foreign consumer credit companies have come to Vietnam, either setting up greenfield ventures or acquiring existing players. Even with so many players in the market, there is room for improvements in consumer experience.

FE CREDIT, originally founded as the consumer finance division of Vietnam Prosperity under the Vietnam Prosperity Joint Stock Commercial Bank (VPBank), was established in 2010 and is one of the early players in the market.

As of 2018, FE CREDIT had served over 10 million Vietnamese citizens across 63 cities and provinces nationwide with a wide range of products including personal loans, consumer durable loans, two-wheeler loans, credit cards and insurance schemes.

In China and India, many consumer lending companies have launched a complete digital process of loan application, approval and disbursement, taking only 10-15 minutes for customers to receive the money.

FE CREDIT recognized 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 company’s operational costs would be reduced. FE CREDIT then worked with Ernst & Young (EY), world’s leading advisory services provider in assurance, tax, and transaction, and several FinTech partners to implement a robo-lending platform app, suitably named as $NAP.

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

The platform digitizes the entire customer journey (or lifecycle) from application through mobile devices to receiving disbursal through bank accounts 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 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 the 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 1 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), an initiative of the International Finance Corporation (IFC), has recognized the platform to be a ready-to-use, highly suitable demand-side use case replicable across markets by partner financial institutions (FIs) to complement their supply-side platform.

In addition, the FE CREDIT platform can integrate with the AFIN platform when the latter is ready.