How Singapore fintech Cashwagon serves Asia's underbanked

In July, Cashwagon launched a cash pick-up option in the Philippines.

Financial inclusion remains a big challenge for the developing world, with more than half of the adults in the poorest 40% of households remaining outside the reach of traditional financial institutions, data from ADB show.

This has resulted in a payments and transfers gap as high as 65% in some Southeast Asian (SEA) countries; a savings gap of as much as 80% or around $80b across the Philippines, Indonesia, Cambodia, and Myanmar alone; a credit gap patched up by informal lenders that amount as high as $80b across the four countries named; and an insurance gap of up to $700m, according to ADB.

The large potential in bridging these gaps has attracted the attention of digital financial firms seeking to plug the gap in the market. A report by Oliver Wyman estimated that digital technology could result in $1t of increased revenue and cost savings. There are more than 400 million internet users in SEA alone, whilst internet penetration and mobile connectivity grew a whopping 65% and 132% in 2018, respectively.

Against this backdrop, digital fintech company Cashwagon has leveraged digital financial innovations to make traditional consumer financial products more accessible to the 70% of Southeast Asians that remain “excluded and underserved by traditional financial services”.

The Singapore-based company currently serves five SEA countries where it provides access to single-payment loans, instalment loans and investment products to a booming tech-savvy demographic without access to traditional banking services.

Cashwagon’s chief executive officer, Maxim Chernuschenko, founded the company two years ago. A veteran in the consumer finance industry with more than 20 years of experience, Chernuschenko said that he realised the huge market potential in serving the underserved and underbanked Asian people in his stint at FE Credit, the largest point-of-sale lender in Vietnam. His first venture was Dr Cash, reportedly the first pan-Asian online microfinance company.

“I believe that when people have easy access to financing, families and communities
are healthier, happier and better positioned to succeed,” said Chernuschenko in an interview with Asian Banking & Finance. “However, the reality is that 70% of South-East Asians are excluded and underserved by traditional financial services. To create greater accessibility, I started out Cashwagon to connect people with the financial services they’ve been looking for.”

To date, the company’s partners have processed more than 2.8 million loans amounting to around $333m (US$240m) and has accumulated more than 5 million registered users. Their mobile app has been downloaded more than 3 million times as of July 2019.

Cashwagon places high premium on speed, promising a turnaround time from application to credit of only a few minutes; in Indonesia, the company said that it will only take an average of three minutes to have a loan application approved as it banks on AI and big data capabilities to streamline every step of the process from application, processing, disbursement and even repayment.

In July, the company’s Philippine arm introduced a cash pick-up option which does away with the need to have a bank account. Users from even far-flung communities can pick up cash loans from thousands of Cashwagon’s partners by presenting the reference number sent via SMS along with an identity card used in their application.

“As our research shows, more than a million registered customers all over Asia have opened a bank account specifically to get access to our platform. At Cashwagon, we felt that this can be changed for the better,” noted Chernuschenko on the recent Philippine service expansion.

Chernuschenko shared that Cashwagon has a target market of over 60 million Filipinos. Philippines has one of the largest number of internet users in the region, with more than 76 million web users and 124.2 million mobile subscribers--well beyond the total population of 107.3 million in 2019.

Its other markets--Sri Lanka, Indonesia, Vietnam, and Malaysia--has more than 246 million internet users combined, according to Internet World Statistics.

Combined with these numbers, Chernuschenko sees a huge potential in the fintech market. However, despite seeing more financial providers tapping into advanced technologies to meet local demand, he noted that the current state of financial services in the region, “do not yet meet the demands of the customers in full.”

“Today, many fintech companies, such as Cashwagon have been leveraging on technologies such as AI and Big data to address the growing financial inclusion problem in Southeast Asia, enabling the underserved customers to take control of their financial lives,” said Chernuschenko. “Most of the population already are adopters of mobile and internet technologies, at the same time finances are increasingly getting digital, but I think that financial services do not yet meet the demands of the customers in full.”

“Cashwagon was designed from the start to be a global project, so next years we will keep extending our geographical reach. We are also working very hard to make our technology truly borderless by automating many functions that today need human intervention, such as telesales, customers support and collection,” said Chernuschenko, adding that the company plans to launch virtual credit card services in the future.

“We believe that when people have easy access to finance, families and communities are healthier, happier and better positioned to succeed.”

By Frances Gagua