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

FE Credit, one of Vietnam’s oldest and the largest consumer credit company, worked with EY and several FinTech partners to implement a robo-lending platform app, suitably named as $NAP, which digitizes the whole process of customer on-boarding, loan application, know-your-customer (KYC), credit underwriting, loan approval and disbursement.1

As a result, FE Credit reduced the borrowing process from 4-5 days to less than 15 minutes, thus drastically increasing its appeal to customers, while overcoming the challenges inherent in the traditional lending model.

  • The better the question

How to improve customer experience so that they would do more business with us?

With digitization, FE Credit transformed the consumer loan borrowing process for Vietnamese customers.

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% in 2017 compared to 50.2% in 2016, and with the percentage of consumer lending in total credit rising to 18% in 2017 from 12.3% in 2016.2

In this context, various players, both domestic and foreign, are eyeing a slice of the market. Banks and corporates 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.

With so many players in the market, the consumer experience still leaves much to be desired. Even though most Vietnamese customers are tech savvy (84% of the population were smartphone users at the end of 2017), the process of securing consumer credit is mostly manual and consequently, slow from a customer’s perspective.3

The typical process is as follows: A customer files an application either online or offline and submit paper documents to the credit company. The company then assesses the documents, and then calls or texts the customer if the loan is approved. The customer then signs a paper contract with the company, and only then the company remits the money to the customer’s bank account. The process usually takes at least 4-5 days.4

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 millions of Vietnamese across 63 provinces and cities nationwide with a wide range of products consisting of personal loan, consumer durable loan, two-wheeler loan, credit card and insurance.

The company boasts a database of 25 million customers (or 27% of the population of Vietnam), of which 12 million were applicants. The company has given out 8 million loans, and issued 1 million credit cards over the past 8 years, capturing a market share of over 50%, and bringing more people into the fold of organized finance than the whole banking sector put together.

Kalidas Ghose, FE Credit’s CEO, thinks there is still much room for growth for the company’s revenues and customer base.

FE Credit previously had a basic app, but besides filing the loan application on the app, customers still had to submit physical documents and sign the contract offline before receiving the loan disbursement in their bank account. This app was hence not a significant improvement from the customer’s perspective in terms of time and convenience.

Meanwhile, 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 cost of operation for FE Credit will be reduced.

As the Vietnamese consumer lending market heats up with many players, the risk would be high for FE Credit to lose market share to competition if it doesn’t move fast.

  • The better the answer

Greater challenge creates room for more remarkable improvement.

FE Credit, its FinTech partners and EY made robo-lending work in a paper-based system.

FE Credit worked with EY and several FinTech companies to create an end-to-end digital lending platform app.

The lending platform for the $NAP app was created by integrating through APIs a host of digital technology 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.5

The platform digitizes 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 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.

To overcome this challenge, the new FE Credit $NAP app uses OCR and intelligent character recognition (ICR) to verify the customer’s identity, by optically reading documents that customers submit through the app in the form of images.

A total of 15 integrations had to be done with internal and external systems including various bureaus, payment gateways and banks to achieve end-to-end digitization.

As this is the first app of its kind in Vietnam, all templates had to be created from scratch. Moreover, as customers in Vietnam have never used such an app before, the app has to be very simple, self-explanatory and intuitive.

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 October, the app had over 10,000 downloads.6

  • The better the world works

Making use of mobile for large-scale customer acquisition.

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.

In Vietnam, mobile phones have enabled digital connectivity to the unbanked population and mobile transaction platforms are key to acquiring customers in the unbanked market due to its convenience and accessibility.

FE Credit now has a first-mover advantage in the Vietnamese consumer lending market. Moreover, by using AI algorithms and KYC insights to further analyze the market segment, FE Credit has successfully penetrated the unbanked market as they managed to understand their customers’ needs and wants.

The company is now working with some of the leading new-age lenders to bolt on to the platform as white label partners, giving them access to Vietnam while offering more options for inclusion which would not be possible without the platform.

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 (FIs) to complement their supply-side platform. In addition, the FE Credit platform is capable of integrating with the AFIN platform when the latter is ready.

FE Credit is working on the possibility of extending its lending services to the rural areas, in collaboration with IFC, to add to its urban and suburban presence.

With all these moves, FE Credit, in partnership with IFC, aims to create a mobile-centric, digitally driven financial ecosystem driving financial inclusion and support economic progress by driving the wheels of domestic business, both on the supply and demand sides.

Contact Us

EY - Duong Nguyen

Duong Nguyen

EY Deputy Market Segment Leader

Saman Wijaya Bandara

Partner/Principal,Assurance, Audit
EY - Varun Mittal

Varun Mittal

EY Global Emerging Markets FinTech Leader