How fintech is helping Southeast Asia’s ‘unbanked’

In this picture taken on June 9, 2017, a farmer pulls a cart loaded with newly harvested bunches of rice from a rice field in the outskirts of Hanoi. (AFP Photo/Hoang Dinh Nam)

Southeast Asia has shown itself to be one of the most rapidly advancing regions in the world.

With a booming population of 644 million (and rising), half of whom are internet and social media users, you would expect that most people around the region would have access to most of the basic necessities required by a modern life.

You may find it surprising, then, that some estimates point out that barely a quarter of the region’s population have a bank account.

For a region that has such a high internet penetration rate, it’s hard to fathom that something many of us consider basic, like access to a bank and credit, is unavailable to so much of the Southeast Asian population.

Empowering the masses

The traditional banking model will always make it difficult for those who aspire to enter the middle to secure credit. The need for paperwork will always be there, even though there are alternative ways to prove that one would be a safe credit risk.

Fortunately, a few fintech companies are thinking out of the box to bring about a positive change for those who need it most.

Alternative credit scoring

One of these is CredoLab, a company that operates out of Singapore. They have created an app that scours the internet for your digital footprint, and turns over 50,000 data points to an artificial intelligence solution that turns data into 1,000 predictive markers.

The potential for CredoLab and their proprietary product, CredoApp is huge. They present a chance for consumers to secure loans through alternative credit scoring, which will then allow them to improve their quality of life.

It is an interesting model for those who would be good credit risks but don’t have the paper trail available to prove it to moneylenders. This is prevalent in remote areas, where it does not make sense for a bank to set up a branch – and people suffer because they may need to make an extremely long trip just to access basic financial services.

The upside can’t be ignored, as widening the availability of financial services opens up a hefty new market that would otherwise have remained underserved.

There are many other companies that offer comparable services as well, such as Lenddo and TrustingSocial.

Data use

The ability to perform such services also serves as a strong reminder that almost everything you do on the internet leaves a traceable footprint.

This certainly raises issues about privacy, and whether or not you are comfortable with companies being able to determine something as important as a credit score through your previous online behaviour.

However, we live in a world where Facebook tracks your every move and allows advertisers to target you based on your previous behaviour. Most of the time, your data is used to try to get you to spend money on frivolous consumer goods.

At the very least, it is good to see that there are companies out there that are also trying to use data to help people get a step up in their lives.

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