GCash leverages AI for credit scores, collections

INQUIRER FILE PHOTO

GCash is leveraging artificial intelligence (AI) to underwrite loans for borrowers who do not have yet an established credit history, which is required when securing financing from traditional banks.

In a statement on Thursday, the Ayala-backed e-wallet operator said its lending arm, Fuse, has been making loans accessible by using AI for credit scoring.

“By using AI to assess the user’s eligibility and streamline collections, we’re able to offer a more ethical and efficient lending experience and better serve millions of Filipinos,” Fuse president and CEO Tony Isidro said.

READ: GCash boosts valuation to $5B with new funding from Ayala, MUFG

GCash noted that “unequal access to credit remains a barrier to financial inclusion in the Philippines.”

For example, it explained that borrowers from lower socio-economic classes are deemed unqualified to secure loans from traditional banks as these require credit history, collateral and proof of income.

In addition, GCash said that some Filipinos were deterred from undergoing a loan application process because of “lengthy procedures and excessive paperwork.”

Unfortunately, this situation may prompt them to borrow from informal lenders who charge exorbitant amounts of interest rates, making it even more challenging for the borrowers to repay the loan.

Among the lending products of GCash is GSakto Loans, which are sachet-sized loans ranging from P100 up to P1,000. The loan is payable within two weeks or every fortnight when salaries are usually disbursed.

It also offers loans of up to P125,000 to help micro, small and medium enterprises scale up their business.

Lastly, GCash has a buy now, pay later product, which has become popular amid the booming of online shopping.

GCash has disbursed over P155 billion in loans to over 5.4 million borrowers.