SCB unveils nanofinance for low-income earners

SCB unveils nanofinance for low-income earners

Ms Thiranun holds a mobile phone showing Monix's Hahi Money app.
Ms Thiranun holds a mobile phone showing Monix's Hahi Money app.

Siam Commercial Bank's (SCB) digital lending arm Monix has launched a nanofinance service for low-income earners, with a loan target of 300 million baht for the first year of operation.

Monix, in collaboration with Chinese tech unicorn Abakus, has extended 20 million baht worth of nanofinance loans to 3,000 customers since the business's debut on May 13 through the Hahi Money app, said chief operating officer Thiranun Arunwattanakul.

Most of the company's debtors are online vendors, taxi drivers and housekeepers with monthly income below 15,000 baht, she said.

Underbanked customers, those who find it difficult to access bank loans, are the company's target customers, and there is room to enter the low-income-earner segment, Ms Thiranun said.

Initially Monix is focusing on existing SCB depositors who also use the SCB Easy app, in order to control credit risk.

The joint venture fintech company set a minimum credit line of 2,000 baht and a ceiling of 100,000 baht. It charges up to 36% interest, the ceiling for nanofinance services.

Despite the coronavirus outbreak, the company did not delay its commercial launch, Ms Thiranun said.

"The outbreak actually increased loan demand, especially from our target customers," she said. "These loans can boost their liquidity and help them in difficult situations."

Debt repayment ability is the main factor in determining digital loan approval, which is based on data analytics. For borrowers, they want to know the result of their loan application as soon as possible, and Monix offers a 30-minute loan approval process.

Financial documents for loan applicants are not required.

It's too early to estimate non-performing loans for the digital lending product. Although the company can detect signs of debt defaults in the first month after disbursing the loan, the system still requires more data, Ms Thiranun said.

So far there have been about 70,000 downloads, of which 35,000 were by active users of the Hahi Money app. The company expects downloads to reach 1 million by the end of the year.

To comply with good risk management, the lending portion of salaried workers to self-employed is set at 70:30.

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