How this fintech is leading the charge for financial inclusion across Southeast Asia

• Advantage Boost with its position and proven ability to operate on a large scale
• Almost USD 451 million in loans disbursed to MSMEs across Malaysia and Indonesia

Access to finance has long been a point of contention for micro, small and medium enterprises (MSMEs), even before the pandemic. According to industry studies, over half of MSMEs across ASEAN are unserved or underserved by traditional lenders.

In Malaysia, some of the financing difficulties faced by small businesses are reported to include higher collateral requirements from traditional financial institutions (58.8%) and delays in loan approval or disbursement (23.5%). Indonesia, on the other hand, faces similar challenges, as 51% are unbanked, while 26% are underbanked.

That means a huge gap of economically underserved communities among small businesses, which if addressed, could potentially increase the GDP of a country’s local economy by up to over 30%. This is where fintech comes in, to close the financial inclusion gap and make financial solutions accessible through the power of technology and data.

One such Southeast Asian fintech company leading the way in financial inclusion is Boost, a regional full-spectrum fintech arm of Axiata, which recently made headlines across the region, along with its consortium partner, RHB, as one of the five winners of the digital banking license granted by the Central Bank of Malaysia.

Based on industry case studies of digital banks worldwide, Boost’s upcoming digital bank is considered a front-runner due to its clear advantage as an established fintech player with an extensive ecosystem and a proven ability to operate at scale, meeting the criteria of a successful digital banking.

Through its holistic fintech ecosystem spanning its all-in-one fintech app, merchant solutions, AI-based lending business and cross-border payment platform, Boost has financially empowered millions of users and merchants across Southeast Asia since 2017.

Boost is also the first all-digital financier in Southeast Asia to secure an investment grade A1 rating from RAM Ratings, the leading credit rating agency in Malaysia, underscoring Boost’s capabilities and expertise in accelerating financial inclusion through robust alternative data scoring frameworks.

Its AI-based lending business already has an impressive track record in addressing these financial inclusion gaps by serving the underserved at scale with simplified access to digital financial solutions.

Since its inception, Boost has disbursed loans worth close to US$451 million (RM2 billion) to thousands of MSMEs across Malaysia and Indonesia, almost half of whom have never received credit from other financial service providers before. Despite this, Boost maintained a low single-digit non-performing loan rate and has seen a high loan repeat rate, reaching over 90% in Malaysia.

Consider Ahmad, for example, a local entrepreneur who runs a small mom-and-pop shop in rural Melaka, Malaysia. With macroeconomic headwinds causing cash flow disruptions, he sees himself needing immediate funding to keep the lights on.

Considering that the only options available in an average bank usually range from US$67,750 (RM300,000) up to millions, Ahmad found that traditional banks were unable to meet his micro-loan needs. Even if Ahmad could afford the loan, he may be rejected due to lack of collateral and guarantors.

However, through digital microloans with Boost, Ahmad can access immediate funding through a simple 5-minute digital application journey supported by AI and machine learning tools, with funds disbursed within 48 hours of approval.

Additionally, when Ahmad needs to place orders from distributors to purchase weekly stock for his inventory management system, Boost provides lending solutions through an API link for Ahmad to order stock using credit as an alternative to cash within that purchasing module. This is possible through Boost’s holistic fintech ecosystem and technology, where digital financial solutions are embedded in the existing transaction journey and purchase cycle of businesses.

It is for these reasons that it was no surprise that Boost was the recipient of the digital banking license in Malaysia. All eyes are now on Boost in the coming months as merchants and users alike look forward to the much-anticipated digital bank, which is expected to further revolutionize and democratize access to financial services.