Robocash Group study: Two-thirds of asians relied on NBFCs and MFIs for first loan

The new customer survey by the fintech holding, Robocash Group shows that non-bank financial companies (NBFC) and microfinance institutions (MFI) are the first providers of credit for almost every third individual in Asia (31 per cent).

Although the primary source of credit is still held by banks, alternative lending is also gaining traction.

For example, the survey found that bank loans first were obtained by 41 per cent of respondents in India, Philippines, Indonesia and Vietnam. On the other hand, 31 per cent of responses account for NBFCs and MFIs.

Of the four countries, Philippines is the one that stands out the most. In Indonesia, the first providers of financing are NBFCs and MFIs, accounting for 29 per cent of local respondents. On the other hand, for India and Vietnam, the figures are 26 per cent and 25 per cent respectively each. The highest figure is recorded by Philippines at 41 per cent, whose share is also higher than banks by 12 per cent.

The survey suggests that geographical fragmentation is the primary reason causing bank branches to be less accessible compared to neighbouring countries, hence the difference in the figures. Due to remote banking still being underdeveloped, the demand for alternative payment and credit solutions has been increased.

The importance of remote channels for customers when they apply for financing is also highlighted by the survey. For example, in the Philippines, 27.8 per cent of people personally visit a lender’s office for loan whereas 36.5 per cent obtained their first loan through digital means. In Indonesia, respondents are divided into 46 per cent and 42 per cent respectively regarding personal visit and digital means. In Vietnam, 23 per cent visited offline branches whereas 62 per cent remotely applied for first credit. In India, 31 per cent opts for traditional means for getting loans whereas 27 per cent relies on digital means.

In light of this, the survey also states that there might be inaccuracy because some respondents have forgotten what means they used to get their first credit. The rapid development of fintech services and electronic payments may narrow the gap in the region.

Analysts of Robocash Group remarked regarding the survey findings: “With the rapidly growing digital adoption, people are increasingly looking for simple solutions that would meet their needs quickly. In this sense, the results have confirmed the importance of financial technologies for people in Asia. Remarkably, at least more than one-third of respondents (37%) stated confidently that in 2019, they used fintech products more often than a year before.”