The loan odyssey: a choose-your-own-adventure story

Many of the more privileged among us may view financial services as an everyday part of life. Bank accounts? Already have them. Loans? Just a click away. Credit cards? Not just one, but multiple.

However, reality could not be more different for many of those in the underbanked and unbanked segments in Southeast Asia. For them, accessing financial services can involve a whole journey.

Step into their shoes for a moment:

Trials and tribulations

The story you’ve just played through isn’t unique. In fact, it’s extremely common in Thailand, where around 63% of the adult population is considered unbanked or underbanked.

“Even though banks in Southeast Asia are generally successful, you still see many underserved segments, as financial inclusion is often easier said than done – it requires new approaches that go beyond traditional banking methods,” says Tanyapong Thamavaranukupt, president of Ascend Money, which runs the TrueMoney e-wallet platform in Thailand.

Tanyapong Thamavaranukupt, president of Ascend Money / Photo credit: Ascend Money

Ascend Money has been working toward changing this state of affairs by drawing on a wide range of data – such as behavioral information, bill payment history, and transaction frequency and volume, among others – from its TrueMoney platform to assess users’ suitability for offerings such as buy now, pay later services, credit lines, and investment products.

It’s also advancing its AI and data analytics capabilities to enable smarter, more contextual decision-making, allowing it to better understand users’ financial patterns and needs. This will increase its reach and allow it to serve more segments effectively.

In contrast, many traditional financial institutions still require applicants to submit physical documents – a hard ask for those in the underbanked and unbanked population, as they usually don’t have these documents on hand or have incomplete records. In other cases, people in these segments rely on inconsistent sources of income, making them riskier in the eyes of traditional financial institutions.

“Based on our data, around 50% of the existing loan customers we have are considered underserved. They’ve never applied to traditional lenders before or always got rejected in the past, but we can approve them,” says Thamavaranukupt.

Ascend Money is now looking to expand its customer base and reach more underbanked and unbanked individuals.

“We believe we can improve people’s lives and scale that impact to a broader group of customers. Becoming a virtual bank will allow us to do that,” he adds.

A whole new world

According to Thamavaranukupt, Ascend Money has already helped a wide range of people in the underserved segments. Take the example of Udomsak Ruangdej, a 49-year-old food vendor operating in a food court in Bangkok.

“I might face an emergency when I don’t have enough money to keep the shop running or manage cash flow,” he explains. “This week, for instance, sales are going well and stock is running low, but I haven’t received payment yet.”

Photo credit: Shutterstock

That’s because he accepts payments through cash cards issued by the food court, which is settled on a weekly basis. As such, access to immediate working capital is often limited.

“My Pay Next credit limit is not that big, but in an emergency, it’s enough for these types of immediate, short term working capital needs,” he says, adding that the interest rates are much fairer compared to informal loan sources – in those cases, rates could go up to 20% per month.

Cases like this are common for Ascend Money and reflect many people’s daily financial challenges. A virtual banking license would allow it to expand this kind of support to even more people across Thailand’s unbanked and underbanked population while also delivering three benefits for the company.

First, it will bolster Ascend Money’s perception. Gaining such a license would give the company greater credibility, not just with regulators but also with customers.

While its e-wallet platform has several measures in place to ensure security, many users still associate trust and legitimacy with traditional banking institutions, Thamavaranukupt points out.

“Becoming a licensed virtual bank helps break through this perception barrier and positions us as a full-fledged financial partner,” he explains. “Customers will see us as a serious player in the financial services space.”

It’s all about taking the next step from being just a payments provider / Photo credit: Ascend Money

Second, it would allow Ascend Money to offer larger loan sizes. Currently, the firm focuses on smaller loans ranging from US$500 to US$1,000, which it offers through services such as BNPL and personal loans.

A virtual banking license would enable Ascend Money to offer secured loans, raising ticket sizes to a maximum of US$100,000. This would let it cater to the needs of small businesses.

“For businesses such as stores and restaurants, working capital is an area where we see many unmet needs. But we believe that we have the ecosystem and technology to serve them even better,” Thamavaranukupt says.

Third, a virtual banking license would strengthen Ascend Money’s position and credibility among investors, helping it attract additional funding, a potentially lower-cost source of capital. As such, the company would be better positioned to invest in product development, allowing it to expand the reach of its services.

“Our mission has always been about enabling people to access financial services via digital means,” Thamavaranukupt adds.

Pushing the envelope

As the digital banking industry in Southeast Asia continues to evolve, Thamavaranukupt is excited to see what virtual banks can bring to the table.

He highlights how firms will need to challenge the incumbent, traditional banks by capitalizing on data and AI models to understand customers better.

“The way I look at it is this: how can you accept new customers that other institutions won’t accept?” he points out. “The only way you can do that is via better data, credit models, and loan products, all delivered through a fully digital, end-to-end model with low service cost. You have to push innovation much further than traditional banks.”

For example, many small business owners have volatile incomes that may be dependent on the season. Such a setup wouldn’t suit a traditional loan product, which requires consistent repayments every month.

Small F&B outlets like this typically don’t have consistent revenues / Photo credit: Shutterstock

“Digital banks could consider actively adjusting repayment amounts depending on which season the business is in,” Thamavaranukupt suggests.

Ideas like this are right up Ascend Money’s lane, and the executive believes that if incorporated correctly, the firm will be able to enact a better system to assess potential customers, driving improved access and inclusion.

“In traditional institutions, it’s like they use a very rough filter – only very fine grains would be able to pass through,” Thamavaranukupt says. “A more adaptable filter based on data and AI means that we’ll be able to ‘see’ customers that others cannot, letting us serve a wide range of previously underbanked and unbanked people.”

Ascend Money is a fintech firm that’s looking to redefine digital finance in Southeast Asia through innovation, inclusion, and bold leadership. With its reach, data, and focus on underserved users, Ascend Money is positioning itself to play a meaningful role in the next chapter of digital finance in Southeast Asia. To learn more about what it’s doing for the underserved demographics, click here.

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This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.