United Overseas Bank (UOB) has tied up with an emerging Chinese fintech firm to tackle the region's underbanked market.
UOB said yesterday that it has set up a joint venture called Avatec.ai (Avatec) with Beijing-based Pintec Technology Holdings.
The bank holds 60 per cent of the new entity, and its partner the rest.
UOB, with the largest South-east Asia network of the three local banks, plans to invest up to $12 million in Avatec in the next two years.
Pintec focuses on providing credit underwriting models. It helped facilitate 15 billion yuan (S$3.13 billion) in loans in China through about 10 million registered users as at September last year, said company president Zhou Jing at a briefing yesterday.
Pintec collects a fee for each use of its credit assessment model. It can use non-traditional data points such as utility bills, call history and spending patterns to determine if potential borrowers can pay up.
It can tap into retail networks so it can offer loans at the point of sale as well.
The new joint venture will launch its digital credit assessment solution in Indonesia, followed by other markets within the next two years. UOB declined to say which markets but it has operations in places such as Vietnam, Thailand and Malaysia.
Avatec aims to support consumer and small-and-medium enterprise lending activity in the region.
It is offering a technology solution, not the balance sheet. The lending will come from UOB and other lenders with various risk appetites.
UOB, for example, has a limited exposure in the micro-lending space in South-east Asia but Indonesian lenders may use Avatec's service more actively to make more microloans backed by stronger credit assessment.
Mr Dennis Khoo, UOB's head of regional digital bank and strategic initiatives, told the briefing that banks can now access about 10 times the traditional data points that they used to tap. This allows them to extend loans to clients who previously did not have access to credit, and at lower loss rates.
Pintec founder and chief executive William Wei said partnering with a Singapore bank was a logical first step in tackling the South-east Asian market given the closer ties between Singapore and the region.
UOB, with its existing network of clients or potential customers, can help develop the credit assessment model for specific markets in three to six months each time.
