As demand for digital financial services increases with more customers turning to digital solutions for all their financial needs¹, trust is believed to have a positive correlation to usage for most people in Southeast Asia².
It has also been found that integrity and communication are among the characteristics that are the most ubiquitous predictors of trust in providers of digital financial services. In terms of integrity, it is the perception of how trustworthy an organization is, while communication refers to an organization’s ability to effectively provide information in a responsive and transparent manner³.
These aspects translate into an organization’s credibility in the eyes of the public. In short, within the fintech and digital banking space, credibility is a key component for building trust, while integrity and communication are levers that build credibility.
Within Southeast Asia’s booming fintech landscape, one player stands above the rest in this aspect – Boost, the regional fintech arm of Axiata Group Berhad (Axiata), and the winner of the recently awarded digital banking license in Malaysia, along with its consortium partner. RHB Banking Group (RHB).
1. Proven Integrity
Over the past few years, Boost has laid the foundations and built the essential building blocks for a digital bank, for example through Boost’s AI-based lending business which is already operating at scale.
Since its inception, it has financially empowered thousands of MSMEs through digital microfinance solutions, and as of 2022, has disbursed loans worth RM2.5 billion across Malaysia and Indonesia. Not only that, over 40% of their customers had never received credit from other financial service providers before, otherwise known as new-to-credit customers, based on previous research. Nevertheless, Boost has approximately a 90% repeat rate on lending as well as a healthy single-digit non-performing loan (NPL) rate in Malaysia and Indonesia.
This is a testament to Boost’s simple and accessible digital-first solutions, which include a comprehensive e-Know Your Customer (eKYC) via a 5-minute digital application journey supported by AI and machine learning tools, with funds disbursed within 48 hours of approval.
Furthermore, Boost’s reliability is also backed by RAM Ratings, as it is the first all-digital financier in Southeast Asia to secure an investment grade A1 rating from RAM Ratings. The rating from the leading credit rating agency in Malaysia underscores Boost’s capabilities and expertise in accelerating financial inclusion through its robust alternative data scoring frameworks. The portfolio underwent thorough scrutiny and demonstrated solidity to meet its financial obligations.
In addition, Boost also has partnerships that are able to assure investors as well as customers that it is a reliable partner that sets itself apart from other fintech firms. One such example is the signing of a memorandum of understanding (MOU) for a potential digital bank guarantee with Credit Guarantee Corporation (CGC) Malaysia, a company dedicated to helping micro, small and medium enterprises (MSMEs)⁴.
The MOU includes two key parts: the first is a commitment to explore the extension of a portfolio guarantee for Future Digital Bank’s SME focused loans with CGC, and the second to work with CGC to raise referrals to provide funding to eligible MSMEs without security.
Therefore, for Boost, the digital banking venture is not greenfield, but more of a brownfield venture, and it aims to build on its established advantage in the coming months.
As for the upcoming digital bank, Boost’s capabilities are also further supported by partner RHB, which brings to the consortium years of established trust with customers and regulatory authorities, as well as proven expertise across key banking areas, including core banking services, risk management and compliance, liquidity, capital , operational and responsible financing.
2. Commendable communication
Since over five years ago back in 2017, Boost had set out from day one to pioneer the fintech space by pioneering “QR scan & pay” as one of the first eWallets in Malaysia. The aim was to help MSMEs go cashless and bring users, especially the unserved and underserved, into the digital economy, resulting in the ‘QR scan & pay’ feature becoming mainstream locally.
Today, Boost has accumulated more than 10 million users and over half a million merchant contact points across the country. They have been able to drive such high digital adoption, especially among the underserved who are traditionally not as tech-savvy, through consistent and transparent communication, as well as education.
Today, five years later, millions of customers across the region, comprising both users and merchants, are empowered by Boost, beyond payments, across its holistic fintech ecosystem of AI-powered digital lending, award-winning all-in-one fintech app, platform for trading solutions and ecosystem for cross-border payments. Therefore, Boost has established solid credibility with its customers built on trust, and considered a front-runner for its upcoming and much-anticipated digital bank.
As the fintech landscape continues to grow in Southeast Asia⁵, with more than 70% of the population considered unbanked or underbanked⁶, the opportunity is huge for fintech companies in the region to address the needs of the underserved. To drive adoption, fintech companies must first win the hearts and minds of customers by consistently building trust through credibility. Those who earn and retain the trust of customers will have a clear distinct advantage in winning and exploiting the full potential of the Southeast Asian fintech market.
References:
¹ Visa: Almost 70% of Malaysian SMEs are keen to use Digital Bank’s services
² Understanding the role of trust in digital financial services in SE Asia
³ Digital Financial Services for Financial Inclusion in Southeast Asia
⁴ Axiata Digital ink MOU with CGC for potential digital bank guarantee
⁵ Fintech continues to be a hot sector in Southeast Asia after a booming 2021
⁶ The rise of fintech in Southeast Asia
This content is provided by BOOST Malaysia
