A South-east Asian financial technology (fintech) firm backed by Chinese giant Alibaba and Thai conglomerate CP Group is looking to tap the significantly unbanked market in the region. In doing so, Ascend Money also hopes to, in time, create a credit-rating scheme that takes in scoring based on customers' social behaviour, in its vast home market.
Ascend Money aims to serve 100 million underserved consumers by 2020 - five times its customer base. This speaks to the large number of people in ASEAN who have no banking relationship, or have no means to get loans, said its chief executive Punnamas Vichitkulwongsa.
"We call it the vicious cycle of the poor, or the underserved."
As more than 60 per cent of people in the region lack a bank account, Ascend Money has built a mobile wallet that essentially functions as a non-interest bearing account to take in salaries of factory workers. These workers are in markets such as Indonesia and the Philippines, and can use Ascend Money's service for bill payments and fund top-ups for mobile phone services.
Read also: What's in store for Asia's fintech in 2017?
Ascend Money targets users across six markets - Thailand, the Philippines, Vietnam, Indonesia, Cambodia and Myanmar, and serves about 24 million customers. It hopes to scoop up 100 million customers by the end of 2020.
Many of the markets do not have a robust credit-rating system, and Ascend Money hopes to play that role, using data collected from mobile transactions through its services.
"People can be mindful that if they do certain things wrong, opportunities in life will disappear," said Mr Vichitkulwongsa, pointing out that 80 per cent of the ASEAN population have no official access to capital, relying instead on family, or loan sharks. "This could be their only chance in life."
It could come down to making timely bill payments, and holding down a permanent residence, he added.
Experiments in this area of social credit-rating are already happening in China, with Alibaba running its own rating system.
Details are scant, but the Chinese e-commerce giant may look at the frequency of time spent playing video games, or an individual's social network, to determine a user's creditworthiness, according to reports.
Such data scrutiny has already invited criticism, amid fears of excessive intrusion and reductive assessments.
"Obviously you have to subscribe to a fine line of not becoming a Big Brother," said Mr Vichitkulwongsa, commenting on general rating schemes. "But at the same time, most countries don't have a basic system like this. Countries start having a framework, so that citizens can be good citizens. And it will create huge value to society."
Given this vision, Ascend Money will build the business beyond payments, into one that taps financial services such as investments, and e-commerce.
"My wife asked me last month, 'Hey, how much money do we have?' And it took me a long time to answer. I said, I simply don't know. She thought I was trying to hide things from her. I spent my weekend going through different financial relationships to see what our net worth is," he said.
"It should be from one place, where you can manage your financial needs, both in and out, payment, borrowing, investment and insurance. That's how we want to position Ascend Money in the eyes of consumers."
And Ascend Money can enable intelligence on e-commerce through data analytics, he added, using payments to create what he calls the "commerce loop".
This comes amid expected competition between Alibaba and Amazon for the ASEAN market.
"Amazon can easily spend three billion (dollars) in South-east Asia, and not feel anything," said Mr Vichitkulwongsa.
"E-commerce is going to very challenging for anyone, even for Alibaba. Most people don't realise that e-commerce in fragmented markets has challenging infrastructure . . . but winning in South-east Asia is important."
Banks have also been approaching Ascend Money, trying to edge into the underbanked market by tapping unconventional credit ratings to assess potential customers.
"Banks also want to serve the underbanked, but given their cost structure, not knowing the customer is too risky for them. With the distribution channel of the user base, and with credit-rating information, banks find that we can be great partners."
As it is, Ascend Money is building a biometric database, signing up customers through fingerprinting, that show regulators they meet customer verification standards, and provide security protection.
"Some fintech companies think with a catch-me-if-you-can mentality," noted Mr Vichitkulwongsa. "That's not quite right. Our principle is to treat your central bank as your partner."
Ascend Money has already built an agency network that allows customers to withdraw cash from these agents without a typical banking account. Even as customers are comfortable with mobile transactions, they remain wary of Internet banking, speaking to the complexity of operating in this nascent space in the region.
"We find that for the underbanked populations, the more agents and the more usage, the more trust," said Mr Vichitkulwongsa.
As it is, it has about 50,000 agents, with nearly half - or 23,000 - based in Indonesia. For Ascend Money, the "critical mass" of agent distribution is to be 10 times bigger than the number of branches of the biggest bank. Ascend Money expects to hit this number by the first quarter of 2017, said Mr Vichitkulwongsa. The vast network means within 15 minutes or so, customers should be able to reach an agent, he estimated.
Agents, in turn, can earn money from facilitating financial services, with those in Cambodia making average sales of about US$85 (S$120) per month from handling transactions such as top-ups for phone services. This is significant for those living in one of the poorest parts of the world. In 2011, about 40 per cent of the population lived on less than US$2 per day, an Asian Development Bank report showed.
Ascend Money is, for now, 20 per cent owned by Alibaba's Ant Financial, with the remainder owned by CP.
With its strong backing from two Asian titans, Ascend Money has some US$100 million to spend this year alone, to boost its regional presence.
"Ant Financial would like to raise their stake, but we haven't set a timeline yet," said Mr Vichitkulwongsa. "The money, luckily for me, it's not a problem."
This article was first published on Feb 20, 2017.
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