Billionaire John Gokongwei, owner of the Philippines’ largest snack maker and budget airline, and a Skype Inc. founder will invest as much as $200 million over three years to lend to millions of unbanked Filipinos.
The venture, set up last year by Gokongwei’s JG Summit Holdings Inc. and financial-technology startup Oriente, seeks to give credit through a digital platform to Filipinos who often resort to loan sharks because they lack access to formal banking services. Its expansion comes as the central bank encourages emerging technologies to spur financial inclusion in a country where more than 70 percent of adults have no bank accounts.
“The big picture here is how do we liberate and enable under-served Filipinos to have access to funds,” JG Summit President Lance Gokongwei, son of John, said in an interview in Manila on Wednesday.
The platform with Oriente, which was established by a co-founder of Skype and Chinese financial-technology startup LU.com, rivals a venture of Singapore Telecommunications Ltd.-led Globe Telecom Inc. and Jack Ma’s Ant Financial as well as Manila-based PLDT Inc., which is in talks with a possible foreign partner.
The venture is hiring 1,000 people this year mostly to handle verification, loan processing and collection for a targeted half a million borrowers by the end of 2018, said Hamilton Angluben, general manager of the platform, which is called Cashalo.
There are only 41.5 million deposit accounts in the Philippines, even though there are more mobile phones than the 110 million population, and almost 50 million people use Facebook in the country.
“The technological savviness of Filipinos is off the charts,” said Geoffrey Prentice, Oriente co-founder and chief strategy officer. The service will also be attractive because so few people have credit cards, he added.
Bank branches aren’t available in a third of towns and cities in the Philippines, while pawnbrokers and microfinance providers have a wider presence, according to central bank data.
Cashalo users can apply for loans entirely online and those without bank accounts can receive the money in designated convenience stores, pawnshops, and bill payment centers within 24 hours. The service allows customers to borrow as much as 5,000 pesos ($95) for up to 45 days at 2.95 percent plus a 4 percent processing fee. That compares with the 20 percent monthly interest charged by many loan sharks.