RestartME Advisory 7 - Digital Solutions for Microfinance Institutions
Advisory 6
Digital Solutions for Microfinance Institutions
14 July 2020
Introduction
Restart Micro Enterprises (RestartME) compiled a list of digital solutions that microfinance institutions (MFIs) can utilize as they recover and transition from the industry shift caused by the coronavirus pandemic.
This advisory briefer categorizes 15 digital solutions into 3 sections:
1. Digital Data Scoring through Data Analytics. This category discusses 2 solutions that use different types of data such as but not limited to behavioural data, historical payment data, and digital footprint in evaluating the credit worthiness of clients, especially of the unbanked. The client profiles generated by these digital solutions can enable MFIs to make more informed lending decisions.
2. Digital Wallets, Loans, Payments, and Remittances. This category discusses 7 solutions that enable users to send and receive credit and money digitally. Cash can usually be deposited or withdrawn through the outlets, retailers, merchants, cooperatives, and banks that these solutions partnered with, enabling MFIs to reach their clients, especially those who are in the most remote areas of the country.
3. Integrated Solutions. This category discusses 6 solutions that integrate different services, usually customized based on the individual needs of the microfinance institutions. These services include digital payments, cloud storage and hosting, application and website development, and cybersecurity solutions, among others.
RestartME listed digital solutions with extensive user databases and those with readily available data. Our next release will be a feature article based on a case interview with a microfinance institution and one of their partner service providers. It will focus on the challenges and opportunities they experienced as they transitioned to digital.
RestartME recommends that this briefer be used by MFIs to determine which digital solutions they can integrate to their operations as they adapt to the new normal.
Thank you.
Hya Bendaña, Ken Abante, Aika Robredo, Rapa Lopa
Constructive criticism welcome via: hyabendana@gmail.com, kabante@ateneo.edu, and aikarobredo@restartme.ph.
Digital Credit Scoring through Data Analytics
What is Lenddo?
Lenddo is an alternative credit scoring company that generates credit scores through social media. As of 2018, it has assessed more than 7 million people across 20+ countries, enabling lending of over $2 million.[1]
How does it work?
Lenddo uses artificial intelligence to generate three scores: credit score, repayment score, and income score. It uses alternative data sources such as mobile phone, digital footprint, behavioural, and psychometric data to assess the credit risk of the borrowers.[2]
Where can we read more?
Read more at include1billion.com.
What is Trusting Social?
Trusting Social is the largest provider of credit risk profiles in Asia, covering more than 500 million consumers across India, Indonesia, Philippines, and Vietnam.[3]
How does it work?
Trusting Social uses artificial intelligence to generate two scores: a credit score and a fraud score. It evaluates the borrower’s creditworthiness using only their phone numbers and telecommunications data. This enables lending to underbanked consumers, real-time underwriting, and minimizing credit and fraud risks. The company also provides personalized product offerings to maximize profitability and market share.[4]
Where can we read more?
Read more at trustingsocial.com.
Digital Wallets, Loans, Payments, and Remittances
What is Cashalo?
Cashalo is a financial technology platform that delivers digital credit to Filipinos, especially those who are credit-invisible, or those who don’t have financial identities.[5] Since its launch, Cashalo has an average monthly growth of 20%. In less than 2 years, this platform has been downloaded more than 6.5 million times as its user base expanded to over 2.5 million.[6]
How does it work?
Unlike traditional banks, Cashalo only requires one government-sanctioned ID in applying for a loan. Using this ID, borrowers can create their profile, choose their loan amount and terms, and select their cash-out option. Cash can be withdrawn through the borrower’s nominated bank account or via Paymaya.[7] Borrowers can receive updates on the status of their application and confirmation of deposit within 24 hours via email and SMS.[8] With this regular program, borrowers can access P1,500 to P5,000 in the convenience of their phones.[9]
In 2019, Cashalo also rolled out its “nano-lending” program, which offers loans that can be as little as P200 with zero-interest, catering to those who cannot be approved in the regular program. In the nano-lending program, everyone can be approved as long as the data they submit is consistent. This P200 credit limit will be increased later on once the borrower is able to establish a good track record.[10]
Where can we read more?
Read more at www.cashalo.com.
What is Coins.ph?
Founded in 2014 in the Philippines, Coins.ph currently serves over 10 million clients nationwide. It has also built the country’s largest cash distribution network, operating via 33,000 partner locations domestically and over 500,000 locations worldwide.[11] Through Coins.ph, users can pay bills, buy load credits, send money, and receive transfers even without a bank account. [12]
How does it work?
Coins.ph uses blockchain technology to store, transfer, and convert crypto currencies like bitcoins and ethereum to pesos and vice versa. There are 3 basic levels of verification, each of which corresponds to a different wallet and transaction limit. When fully verified, users have an unlimited transaction limit annually, with a maximum of P400,000 maximum limit daily. Should this be insufficient for the users’ needs, they can apply for a level 4 verification account and custom their digital wallet according to their preference.[13] Users can cash in and out through pawnshops, supermarkets, payment centers, bank transfers, ATMs, courier providers such as LBC, and department stores nationwide.
Where can we read more?
Read more at coins.ph.
What is Dragonpay?
Dragonpay provides the unbanked with a convenient and secure option to transact with merchants, retailers, and organizations. Since 2010, this platform has completed over 18 million transactions and has gained over 11 million unique users nationwide.[14]
How does it work?
Dragonpay offers three types of services for businesses: online payments, recurring payments, and mass payouts, all three of which are applicable for microfinance institutions. Dragonpay’s online payments service allows users to make Internet payments that are debited to user accounts real-time through online banking, over-the-counter banking, non-baking payment channels such as Bayad Center and Cebuana Lhuillier, and even e-wallets such as Grabpay and Coins.ph.[15] On the other hand, Dragonpay’s recurring payments solution allows microfinance institutions and cooperatives to easily collect and keep track of monthly contributions from their clients and members.[16] Lastly, its mass payout service allows MFIs to disburse cash to multiple individuals simultaneously instead of doing so individually, completing hundreds and thousands of payments nationwide in a short span of time.[17] The standard wallet of Dragonpay allows unlimited transactions, while its lite version limits it to P100,000 daily.[18]
Where can we read more?
Read more at dragonpay.ph.
What is Encash?
Electronic Network Cash Tellers, Inc. (ENCASH) is the first independent ATM deployer in the Philippines, providing privately-owned ATMs to areas that are unreached by commercial banks, allowing users in remote locations to conveniently obtain access to their finances. Today, more than 700 ENCASH terminals have been rolled out in more than 75 provinces and 420 municipalities nationwide.[19]
How does it work?
Remote areas often do not have ATMs as they are deemed unviable by commercial banks. Residents need to travel for hours just to gain access to the nearest ATM. To augment this gap, ENCASH created partnerships with thrift banks, rural banks, and cooperatives by making them ATM owners-operators. This gives ENCASH partners a distribution capability similar to that of bigger commercial banks, but with limited capital outlay. ENCASH and its partners generate fee revenue every time a customer transact using ENCASH ATMs.[20]
Where can we read more?
Read more at encash-ph.com
What is GCash?
GCash is a digital wallet powered by Globe. As of 2019, it has 20 million users with more than 63,000 partner merchants across the country.[21]
How does it work?
When users register on GCash, they input a 4 digit MPIN. This serves as their authentication code in using the digital wallet for transactions. When fully verified, they can store up to P100,000 in their digital wallet. They can cash this out or withdraw over-the-counter in 30,000 ATMs via Gcash Mastercard or in partner outlets such as Puregold, SM, and Robinsons. They can also cash in or deposit via partner outlets, online banking, and overseas remittance.[22]
Where can we read more?
Read more at gcash.com
What is GrabPay?
GrabPay started out as a mobile wallet for Grab services such as food delivery fees and transportation fares. As of May 2020, it can be used for shopping and delivery of groceries, medicines, and personal care items right to the users’ doorstep via GrabMart; parcel delivery via GrabExpress; fund transfer to other wallet owners; and bills payments to utility, internet, cable TV and even government agencies. [23]
How does it work?
There are 2 types of Grab Wallet - Basic Wallet and Premium Wallet. The maximum transaction limit (spend, send, receive) for a basic wallet is P100,000 yearly. For premium wallet holders, the maximum transaction limit is P1.2 million annually. Users can use this balance to pay for Grab fares, food and parcel delivery, hotels, prepaid mobile loads, bills payment, and even fund transfer and remittances.[24]
Where can we read more?
Read more at grab.com/ph/pay/.
What is PayMaya?
PayMaya is an app that gives you a virtual prepaid card for shopping online, booking flights, and more. Users can get either a virtual Visa or Mastercard depending on the user’s mobile network. Users can also pay bills, send money, and more in-app with 40,000 partners nationwide such as 7-Eleven, Palawan Pawnshop, Smart Padala Centers, SM Stores Business Services and Robinsons, and Department Store Business Centers. [25]
How does it work?
Users with a basic wallet can cash in up to P50,000 monthly and spend up to P50,000 monthly. They also have a maximum balance of P50,000 monthly. Users with an upgraded wallet, on the other hand, can cash in up to P100,000 monthly and spend up to P100,000 monthly. They also have a maximum balance of P100,000 monthly.[26] With this balance, users can buy prepaid load and data packages for all networks - Smart, Sun, TnT, Globe, and TM, at discounted prices.[27]
Where can we read more?
Read more at paymaya.com.
Integrated Solutions
What is Ayannah?
Founded in the Philippines, Ayannah is a provider of digital financial services for unbanked migrants from the emerging middle class and unbanked residents from the base of the pyramid. The company promotes financial inclusion by operating innovative digital financial services that are affordable and accessible, especially to those in the bottom of the pyramid. [28]
What features does it offer?
➔ KayaCredit, a profile scoring service that uses artificial intelligence to assess behavioral data in order to generate a borrower's credit score. After which, the platform connects the borrowers to established lending institutions through an online lender marketplace [29]
➔ Creation of financial profiles through processing and analyzing users’ mobile top ups, remittance transactions, bills payments transactions, and social media behaviour[30]
➔ Sendah, a business-to-consumer (B2C) gift remittance service platform for our Overseas Filipinos with 70,000 clients worldwide. It offers products from gift checks, Jollibee food orders, bouquets, insurance plans, load cards, and even allows clients to borrow loans and pay bills.[31] [32]
➔ Sendah Direct, a software-as-a-service (SaaS) platform that partners with brick-and-mortar retailers such as drugstores and general merchandise stores for mobile top-ups, online game credits, and domestic remittance with 7,000 retail outlet-partners nationwide[33]
➔ Sendah Remit, a software-as-a-service (SaaS) remittance platform that connected payment agents such as pawnshops to cash out remittances for family members once the transfer is initiated by Overseas Filipino Workers (OFWs), especially in critical areas in the countryside where many families are supported by OFWs. This is a cheaper and more convenient alternative to our OFWs who spend as high as 12% of the principal amount on remittance fees alone.[34]
Where can we read more?
Read more at ayannah.com.
What is Instafin?
Instafin is Oradian’s cloud-based core banking platform that integrates all operations of microfinance institutions (MFIs). It is designed to work with low internet connection speeds, enabling MFIs to serve clients in rural areas with limited network bandwidth.
What features does it offer?
➔ Easy-to-use dashboard that comes with an integrated accounting system, loan and portfolio management, customer relationship management (CRM), compliance and risk management, product and delivery channels, and real-time reporting. The dashboard is also designed to work offline.
➔ Instafin Messaging that reminds clients about payments and notifies them when disbursements, deposits, and withdrawals are made in their account through various channels, including SMS.
➔ Instafin Field Officer application that improves a field officer’s ability to serve microfinance clients efficiently. Field officers can download the application to work digitally in the field, as they reach and meet with their clients in more remote areas.
➔ A secure data storage that takes care of the information from MFIs and their clients, reducing risk of losing data to security breaches and geohazards
➔ Automatic updates powered by its cloud-based technology, delivering the an up-to-date and advanced platform
Where can we read more?
Read more at oradian.com.
What is Multisys Technologies?
Multisys is a software engineering solutions firm that provides cost-effective and full scale service tailored fit for businesses. Their clients in the past include banks and finance companies. [36] Multisys currently works with Alliance of Philippine Partners in Enterprise Development (APPEND) to develop its front-end and back-end systems with financial services for the microenterprise sector. This software, now called APPENDPay, is envisioned to be the most advanced systems solution for the Micro Small and Medium Enterprises (MSMEs) and is projected to be used by participating MFIs of more than 8.5 million members.[37]
What features does it offer?[38]
➔ System design and development with back-end and front-end systems adapted to support the MFIs operations, processes, and transactions
➔ Domain and cloud hosting services that deploys the client’s system with the necessary infrastructure and storage that updates real-time
➔ Platform development for website and mobile applications with electronic commerce solutions to allow financial transactions for both platform
➔ Cybersecurity solutions that protect the clients’ and institution’s data, network, and systems against cyberthreats, attacks, and breaches
Where can we read more?
Read more at multisyscorp.com.
What is SmartVista?
Powered by BPC Banking Technologies, the SmartVista is a smart solution for microfinance institutions to reach out to the unbanked with their simple banking services leveraging mobile, e-wallets, and smart payment functions.[39]
What features does it offer? [40] [41]
➔ Centralized administration profile that allows configuration of agent mobile application, management of agents, and clients
➔ Lightweight core banking system that integrates digital channels, a payment engine, card management system, and risk and security features
➔ Dashboard that allows agents to offer the full range of transactions to microfinance clients, including cash deposits, cash withdrawals, money transfers, loan repayments, bill payments, and mobile top-ups
➔ Know Your Customer feature that allow agents to on board new customers and give them access to mini statements, balance inquiries, cash withdrawals, card issuance, and even printing of receipts
➔ Easy verification and enrollment process for microfinance clients by capturing their ID and photo and opening accounts on their behalf
➔ Seamless integration setup into any virtual infrastructure because of its pre-configured online, offline, and near real-time options. It is optimized to quickly integrate with a wide range service providers, money transfer processors, core banking systems, and card management platforms
➔ Platform for microfinance clients where they can access their financial information even in remote locations through mobile phones, mobile internet with low bandwidth, and point-of-sale devices
➔ Flexibility that allows microfinance institutions to customize their SmartVista solution according to their loan structure. For example, some MFIs use solidarity lending - where loans are made to groups rather than individuals. Some MFIs also implement policies including around how long people need to be regular savers before they can take out loans. SmartVista can accommodate these and other loan structures unique to the MFI.
Where can we read more?
Read more at bpcbt.com.
What is TagCash?
Tagcash, powered by Multichain blockchain software, is a digital wallet developer and platform that builds applications, websites, and APIs to allow easy creation, management, usage, and integration of digital currencies so that businesses and organizations can embed digital money in their operations.[42]
What features does it offer? [43] [44]
➔ A platform that easily manages accounts of both clients and merchants and allows deposit and withdrawal through 7-Eleven, banks, and agents nationwide
➔ Mass disbursement to other TagCash wallets that enables employers to send salaries and other incentives to their employees
➔ Crowdlending or peer-to=peer lending system that directly match lenders with borrowers through in-built Know Your Client and Identity systems
➔ Payment system that allows clients to pay bills while also enabling billers to set up their accounts and collect dues through direct money transfer, quick-response (QR) codes, radio-frequency identification (RFID), and near-field communication (NFC) for areas with low internet bandwidth
➔ TagSariSari, a platform that allows sari-sari stores and similar micro-businesses to manage their sales, inventory, and credit
➔ TagTalk, a stand alone chat application similar to WhatsApp and Viber, that enables clients and merchants to transact in-application
Where can we read more?
Read more at tagcash.com.
What is Tala Philippines?
Tala Philippines integrates credit scoring, lending, e-wallet, and other personalized financial services in one platform. It’s a quick cash loan provider with a mobile application that centralizes the entire process, from loan applications to funds release and status tracking.[45]
How does it work?
The mobile application analyzes two types of data: behavioral data and Android device data. Clients input their name, birth date, gender, messages showing utility or phone bill payments, reason for the loan, and amount being borrowed. This app then runs a fraud test by matching these inputs with records of phone or utility bills accessed via text messages on the clients’ phones. After which, the model launches a credit test to assess the users’ capacity and likelihood to pay by checking the device’s type and year of operating system. All these are powered by artificial intelligence and data analytics.[46]
Where can we read more?
Read more at tala.ph.
[1] Lenddo. (2018). Our Story — LenddoEFL. https://include1billion.com/ourstory
[2] Lenddo. (2020). Scoring — LenddoEFL. https://include1billion.com/scoring.
[3] Trusting Social. (2020). About us | Trusting Social. https://trustingsocial.com/about-us/ and Wallach, Eric. (9 August 2019). Geoffrey See, Head of Identity at Trusting Social and Founder of Choson Exchange – The Politic. https:// thepolitic.org/geoffrey-see-university-fellow-10-head-of-identity-at-trusting-social-and-founder-of-choson-exchange/.
[4] Trusting Social. (2020). Trust Score | Trusting Social. https://trustingsocial.com/products/trust-scores.
[5] Cashalo. (2020). About. https://www.cashalo.com/about/.
[6] Dumlao-Abadilla, Doris. (11 March 2020). Cashalo gets $20M fresh funding. https://business.inquirer.net/292259/ cashalo-gets-20m-fresh-funding.
[7] Cashalo. (2020). Cashaloan. https://www.cashalo.com/cashaloan/.
[8] Cashalo. (2020). How soon will I receive my approved cash loan through Cashalo. https://www.cashalo.com/portfolio/ how-fast-will-i-receive-my-loan-proceeds/.
[9] Tayao-Juego. (Annelle). Looking for a quick loan? Try Cashalo. https://business.inquirer.net/263730/looking- for-a-quick-loan-try-cashalo
[10] Dumlao-Abadilla, Doris. (8 July 2019). Cashalo rolls out interest-free ‘nano’ loans. https://business.inquirer.net/274153/ cashalo-rolls-out-interest-free-nano-loans.
[11] Coins.PH. (2020). About | Coins.ph. https://coins.ph/about/.
[12] Coins.ph. (20 November 2020). Coins.ph: My Phone is My Wallet! - YouTube. https://www.youtube.com/watch?v= FG3cfiEyjBM&feature=emb_title.
[13] Coins.ph. (April 2020). How can I increase my daily transaction limits? – Coins.ph Help Center. https://support.coins.ph/ hc/en-us/articles/201305154-How-can-I-increase-my-daily-transaction-limits-.
[14] Dragonpay Corporation. (2019). About Us. https://www.dragonpay.ph/about-us/.
[15] Dragonpay Corporation. (2019). Online Payment Solution. https://www.dragonpay.ph/online-payments/.
[16] Dragonpay Corporation. (2019). Recurring Payments. https://www.dragonpay.ph/recurring-payments/.
[17] Dragonpay Corporation. (2019). Mass Payout. https://www.dragonpay.ph/mass-payout/.
[18] Dragonpay Corporation. (2019). Dragonpay Lite. https://www.dragonpay.ph/lite/.
[19] ENCASH. (2018). About Us. https://www.encash-ph.com/about-us.
[20] Sunstar Philippines. (5 October 2017). ENCASH Inc.: Providing ATM Security for Rural Communities. https://www.sunstar.com.ph/ article/167819/Sports/ENCASH-Inc-Providing-ATM-security-for-rural-communities.
[21] Gcash. (2020). GCash - Buy Load, Pay Bills, Send Money. https://www.gcash.com/.
[22] Gcash. (2020). Getting Started - GCash. https://www.gcash.com/get-started.
[23] Manila Times. (1 May 2020). GrabPay doubles down on cashless services to promote safer payments – The Manila Times. https://www.manilatimes.net/2020/05/01/public-square/grabpay-doubles-down-on-cashless-services-to-promote-safer-payments/721235/.
[24] Grab. (2020). What are the GrabPay Wallet balance and transaction limit - Passenger. https://help.grab.com/passenger/ en-ph/360023805451.
[25] Paymaya. (17 January 2020). What is PayMaya?. https://www.paymaya.com/support/basics/getting-started/what-is- paymaya.
[26] PayMaya. (19 December 2019). Are there limits on my PayMaya account?. https://www.paymaya.com/support/account-help/ limits/are-there-limits-on-my-account.
[27] PayMaya. (19 December 2019). What else can I do with PayMaya?. https://www.paymaya.com/support/basics/ getting-started/what-can-i-do-with-paymaya.
[28] Ayannah. (2020). About Us — Ayannah. https://www.ayannah.com/about-us.
[29] Kaya Credit. (2020). Frequently Asked Questions. https://www.kayacredit.com/faqs.
[30] Reyes, Lyra. (16 March 2017). Meet JuanCredit, the first credit scoring system for the unbanked in the Philippines. https://e27.co/juancredit-credit-scoring-system-unbanked-167965-2/.
[31] Ayannah Digital Solutions Inc. . (2020). Ayannah | Services. https://www.ayannah.com/services.
[32] Sendah. (2020). Sendah the better way to send!. https://www.sendah.com/.
[33] Ayannah Digital Solutions Inc. . (2020). Ayannah | Services. https://www.ayannah.com/services.
[34] Hynes, Casey. (2016). This Startup Is Aiming To Build The Largest Digital Payment Network In The Philippines. https://www.forbes.com/sites/chynes/2016/11/21/this-startup-is-aiming-to-build-the-largest-digital-payment-network-in-the-philippines/#67316972283c.
[35] Oradian. (2020). Instafin - our platform for your digital transformation | Oradian. https://oradian.com/our-platform-instafin/.
[36] Multisys Technologies Corporation. (2019). Multisys - About. https://www.multisyscorp.com/about.
[37] Multisys Technology Corporation. (January 2020). APPEND taps MultiSys to empower MSMEs digitally. www.multisyscorp.com/ news/append-taps-multisys-to-empower-msmes-digitally.
[38] Multisys Technologies Corporation. (2019). Services Offered. https://www.multisyscorp.com/services.
[39] BPC Banking Technologies. (2020). Banking - Digital Financial Inclusion. https://www.bpcbt.com/banking.
[40] BPC Banking Technologies. (2020). Agent Banking - BPC. https://www.bpcbt.com/smartvista-solutions/agent-banking/.
[41] BPC Banking Technologies. (2020). MicroFinance - BPC. https://www.bpcbt.com/smartvista-solutions/microfinance/.
[42] Hynes, Casey. (2017). This Startup Wants To Build A Cashless Economy In The Philippines. https://www.forbes.com/sites/chynes/ 2017/02/27/the-startup-that-wants-to-build-a-cashless-economy-in-the-philippines/#49eb8f521aea.
[43] TagCash. (2019). TagCash - Creating a Cashless Future. https://tagcash.com/assets/pitchdeck.pdf.
[44] TagCash. (2019). About TagCash. https://www.tagcash.com/aboutus.php.
[45] Tala Philippines. (26 June 2019). What is Tala? – Tala Philippines. https://talaphilippines.zendesk.com/ hc/en-us/articles/360029916571-What-is-Tala-.
[46] Shetty, Sameepa. (3 January 2020). Start-up uses mobile data as a credit score for the global unbanked. https://www.cnbc.com/2020/01/03/start-up-uses-mobile-data-as-a-credit-score-for-the-global-unbanked.html