Vietnam’s MFast targets Philippines’ unbanked with $15m raise

At a time when companies are pouring millions to sell their financial products online, from insurance policies to credit cards, Vietnam-based fintech startup MFast is using an old trick instead: agent networks.

Think customer representatives of the ‘90s and early 2000s who go door to door selling anything from cookies to encyclopedias. In the case of MFast, its 350,000 agents in Vietnam have helped disburse US$300 million worth of loans and sell US$3 million worth of insurance policies on behalf of its partner banks and financial institutions.

Now, the company is raising up to US$15 million for its series B round, as it hopes to replicate its success in the Philippines, the second-most unbanked country in Southeast Asia.

In Vietnam, about 69% of its population is unbanked. That figure only slightly improves to 66% in the Philippines, so MFast CEO and co-founder Long Phan Thanh is “pretty optimistic” about the company’s growth potential in the latter market.

MFast was founded by twin brothers Vinh Phan Thanh (left) and Long Phan Thanh. / Photo credit: MFast

“We see the same challenges that we helped solve in Vietnam are also present in the Philippines,” Long tells Tech in Asia.

MFast CFO Minh Quan Dang, for instance, noticed that in both countries, financial institutions mostly compete in urban areas. “So those in rural areas tend to turn to informal forms of credit,” Dang says.

A 2019 survey by the Philippines’ central bank revealed that half of Filipinos source their loans from informal lenders such as friends and family. About a tenth tap informal lenders such as those that offer “5-6” schemes.

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The company is hopeful that one of its most popular product offerings – personal loans regulated by the central bank – would be attractive to Filipinos. The products, after all, are offered by agents, who could be a friend or family member.

Aims for net profitability by 2025

Dang says MFast’s first quarter of operations in the Philippines was promising, as the local office earned revenue with just 30 agents. The company has initially partnered with small financial institutions such as SB Finance, an affiliate of a listed bank in the country, and Global Dominion Financing, a local lending firm, to offer secured personal loans in the Philippines.

The startup believes these milestones show that the business model may work outside of Vietnam. But its executives are aware that MFast’s operations in its home country will remain its main driver for net profitability, which it aims to achieve by 2025.

In Vietnam, the company started offering its own brand of consumer loans. “Distributing our own products certainly requires more work, but has significantly helped MFast increase our take rates and margins,” Dang adds.

The startup’s partner clients in Vietnam include BIDV, the country’s largest bank in terms of assets, and MoMo, one of the most popular e-wallets in the market.

‘Anyone can be an agent’