You’ll never walk a-loan
Kenneth is the Co-Founder of Direct Lending, an online personal lending marketplace that connects borrowers to a means of financing that best suits them. They partner with financiers such as RCE Capital Berhad (a Bursa Malaysia listed company), Public Islamic Bank, and Koperasi. They also collaborate with JCL Credit Leasing, which is a licensed lender registered under KPKT (Kementerian Perumahan Dan Kerajaan Tempatan).
During a chat over Zoom, we spoke to Kenneth about the company and how it has enabled many individuals to finance their dreams through safe, reliable borrowing.
In discussing a common problem with financing, we discovered that it can be quite inaccessible in the sense where if one does not fit certain criteria, their chances of getting a loan are low. The system of financing is split in two ways: one, through the government sector, where it has been observed that civil servants are fortunate, because even those with a bad credit record may be served with Koperasi loans. Second is through the private sector, where it may be extremely difficult to get a loan due to strict requirements that banks have in order to borrow, forcing borrowers to go to licensed moneylenders or notorious “ah longs” (loan sharks). The problem even with licensed moneylenders is that many charges 5-6 percent in interest a month, which is much more than the standard rate of 1.5 percent set by KPKT, which is supposed to be followed. Many also include upfront charges, or demand to keep your ATM card.
Direct Lending’s mission, then, is to provide simple, safe, and affordable financing for all hardworking adults to achieve their dreams. It acts as a platform that screens through moneylenders that appear illegitimate or may attempt to scam borrowers with additional fees. Direct Lending also makes sure to carefully select their partners, choosing not to work with every single financier in the country in order to avoid conflicts of interest between different financiers. This is because if all the banks offer similar criteria, then customers can simply choose to indiscriminately go with any bank, which would cannibalise bank sales. Hence, Direct Lending seeks to understand the needs of its customers in order to find a financier that best fits the bill. Everyone has different needs, and this maintains a diverse and thriving market of entities to borrow from. Direct Lending goes an extra step further to connect potential borrowers to lenders, bearing the extra task of both understandings what borrowers need and taking note of what financiers require of potential borrowers, too. Direct Lending incorporates these aspects into an algorithm that has potential borrowers take a test on their website, matching them to the most suitable financier.
When we asked how the company is coping with the economic impact brought by Covid-19, Kenneth shared with us that the pandemic outbreak might be a significant factor in whether the company will be able to expand. He told us that currently, the momentum of lending is slow. The 6-month moratorium implemented by the government means that while borrowers have extra cash, they are also more careful with it, which slows down spending traffic. Hence, in the coming 2 to 3 months, there won’t be an expected spike in borrowing and lending until the banks start to collect repayments. Furthermore, the reason for personal loans in the first place would be for big-ticket items like emergencies, renovations, or couples who want to get married – since there has been such a sharp decrease in these transactions taking place, lending rates are also low. Thus, lending rates are expected to climb again when things become more stable.
However, they also found new opportunities amid uncertainties within the economy. Kenneth revealed to us that the company is currently experimenting with being the go-to place for microentrepreneurs and gig-economy workers. In Malaysia alone, 26 percent of the total 15.3 million Malaysians in the workforce form part of the growing gig-economy, but traditional financial institutions are not focusing on financing this community because of their unstable income stream. Direct Lending saw a huge untapped opportunity in this segment, in which they can offer a “pain killer” solution with their Program Bantuan Beli Bekalan. This program aims to help the gig-economy workforce navigate through the new post-COVID-19 norm by providing them the necessary financial aid in business capital.
We closed the interview by asking Kenneth if he had any advice for any young person looking to enter the industry. “To deal with personal finance is very important,” he said. During his university days, personal finance was not stressed highly enough. Today, the topic has grown in importance because the bankruptcy rate in Malaysia is very high. His advice is that one should understand what one needs, and not what one wants. “Track your daily and monthly spending, and reflect on what you’ve recorded to know how much is being spent and what you’re spending on. There are many apps available to help do this. When youngsters grow up, their credit profile will mean a lot,” he emphasized.
Before we ended the Zoom call, Kenneth stressed his mission of, through Direct Lending, wanting to help those who are labeled as undeserving of a loan because they lack a credit record or have a bad history with banks. He wants to see the coming generations become familiar with personal finance because it is a defining factor for whether they might be able to reach their goals without the risk of it coming back to bite them.
Journalists: Bryan and Guan
Author: Faith Ling
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