Although banks in Asia preserve their position as the primary source of credit, alternative lending has taken a significant place too. In particular, the survey revealed that 41% of respondents in the Philippines, Indonesia, Vietnam and India obtained bank loans first. MFIs and NBFCs hold the second notable part of 31% of responses.
In India, the share is a bit lower than the average results in Asia, as MFIs and NBFCs turned out to be the first provider of financing for 26% of local respondents. Indonesia and Vietnam had 29% and 25%, respectively. Meanwhile, the result in the Philippines amounted to 41%. What is more, it outpaced the share of banks by 12%. The main reason for such a difference is the geographical fragmentation, which makes bank branches less accessible than in neighbouring countries. The underdevelopment of remote banking only intensifies the demand for alternative credit and payment solutions.
In this respect, the survey has also confirmed the significance of remote channels for customers when they apply for financing. For instance, in the Philippines, 36.5% of respondents took the first loan using digital means, while 27.8% made a personal visit to a lender’s office. In Indonesia, responses split by 46% and 42%, respectively. Meanwhile, the Vietnamese respondents applied for the first credit remotely most often – 62% and only 23% visited offline branches. There is a different situation in India, as traditional means to obtain a loan slightly outpaced digital ones – 31% vs 27%, respectively. However, there might be an inaccuracy too: some respondents could not remember how they obtained the first credit. Anyway, with the fast development of electronic payments and fintech services in the region, the gap promises to disappear soon.
Commenting on the findings, analysts of the company added: “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 only 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.”
