KUALA LUMPUR – Whilst the global economic effect of the COVID-19 pandemic has posed challenges at almost all industries in 2020, Funding Societies believes that it has also served as an accelerator for FinTech adoption – and, in the case of financial services – it has led to an increased use of digital financing solutions.
2020 performance review
Echoing this, the largest peer-to-peer (P2P) financing platform in Malaysia has successfully disbursed more than RM650 million to-date, amid the recent year being dominated by the COVID-19 outbreak. This strong performance further solidifies its leading position in the industry with more than 60% market share, having disbursed RM6 billion regionally.
The platform has since offered deferment and extended deferment programs to qualified MSMEs, ensuring a win-win situation for both the MSMEs and their investors. On the investor front, Funding Societies has successfully onboarded 50,000 registered investors to-date, despite the volatile investment environment.
“Aside from a greater awareness of digital investment platforms in recent years, the growth in our investors base can be attributed to increased correlation across traditional asset classes such as stocks and bonds, which thus calls for greater need for investment diversification beyond those asset classes,” said Wong Kah Meng, Co-founder and Chief Executive Officer of Funding Societies Malaysia.
“We also successfully launched notable partnerships with various industry players as part of our efforts to expand our reach to more SMEs, including U Mobile, Razer Fintech and TM Info Media (via Yellow Pages platform), to name a few. These strategic partnerships have enabled us to reach out to creditworthy MSMEs, by leveraging on our partners’ MSME network and data, with consent, and offering them tailored financing solutions,” remarked Wong.
Funding Societies has since maintained an average default rate of around 3% via its multi-pronged risk assessment approach, including continuously monitoring and analysing the impact of COVID-19 and the Movement Control Order (MCO) on their MSME clients, reviewing existing MSMEs’ exposures, and implementing action plans for impacted businesses.
Outlook for 2021
As the most hard-hit segment, MSMEs continue to have the Government’s substantial support in helping them to recover from the impact of the pandemic, via the PENJANA stimulus package worth RM35 billion and the additional measures announced in the expansionary 2021 Budget.
On the P2P financing industry-focused incentive, Wong expressed, “We are appreciative of the Government’s confidence in P2P financing as a viable financing solution for MSMEs. The additional RM50 million allocation to P2P financing platforms in matching investment grants as announced in the 2021 Budget for instance, is very timely given the challenges that local businesses face, to ensure they can bridge their short-term cash flow needs whilst their business recovers.”
“Based on our forecast for 2021, we expect to disburse more than RM1 billion in financing cumulatively, as the economic environment stabilizes and recovers. As one of the key verticals of the FinTech industry in Malaysia, we believe that P2P financing is well positioned to be at the forefront of driving Malaysia’s digital financial inclusion,” Wong concluded.
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