Gokongwei-led JG Summit Holdings and Hong Kong-based global financial services and technology firm Oriente are jointly investing at least P10 billion in rolling out Cashalo, a new mobile lending platform that offers cheaper credit to people who are not served by the formal banking system.
Cashalo – both a lending platform and the brand for a string of financial services that Oriente Express intends to bring to the Philippines—aims to reach 500,000 retail clients by the end of the year, Cashalo general manager Hamilton Angluben said in an interview.
Within a processing time of as fast as 30 minutes, the platform offers loans of P3,000 to P5,000 at an interest rate of 2.95 percent a month (at tenor of 15 to 45 days), lower than the rates charged by loan sharks of 20-40 percent and at par with or lower than the rates charged by other financial institutions like credit card issuers.
“We are definitely setting a new benchmark for the industry and with that, we know that we have game-changing product. But more than a game-changing product, I think this is a life-changing product in the sense that we’re really making a big difference,” Angluben said.
For a person earning P15,000 a month who gets a loan of P10,000 at 20 percent, Angluben said this meant a P2,000-interest monthly compared to l4“That P1,500 difference is so huge. It can pay your utilities or maybe groceries for half a month,” Angluben said. “Instead of trapping someone in this never-ending cycle of debt, we want to empower them by offering affordable loans,” he said.
As many of the small enterprises in the Philippines are under single proprietorship, JG Summit president and CEO Lance Gokongwei said this platform would also benefit microentrepreneurs in need of credit.
Gokongwei said the new platform sought to provide solution to a basic problem in the Philippines—a market where 40 million people borrow from informal lenders and only 30 percent of the population have relationship with banks.
Cashalo is seen on track to create over 1,000 jobs by end-2018. The P10 billion investment is expected to be disbursed in the next three years.
Cashalo draws on Oriente’s proprietary technology, data science capabilities and wealth of experience in building and scaling businesses in emerging markets. Its founders are behind internet giants Skype and LU.com.
The platform is also seen to benefit from JG Summit’s local knowledge, extensive resources and vast datasets on consumer behavior.
“JG Summit is a phenomenal partner and with their considerable resources we are in a strong position to connect millions of hardworking Filipinos to the type of financial infrastructure they deserve and will help advance their lives,” said Geoffrey Prentice, co-founder and chief strategy officer at Oriente. “We share a common goal to unlock financial freedom, trust, and opportunity for undervalued communities and Cashalo is set to be the agent of change.”
“Through the Cashalo app, we will collate and analyze hundreds of alternative data points on consumer behavior to develop robust credit and risk assessments, effectively filling the gap left by traditional credit scoring methods and lenders,” Angluben said.
The Cashalo app is now available at Google Play store: https://play.google.com/store/apps/details?id=com.oriente.cashalo&hl=en.