This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on June 20 - June 26, 2016.
The on-demand economy is here to stay. Services such as Agoda, Uber, Grab and GoGet have changed how people look for accommodation, travel and get tasks done, says Vincent Chin.
“On-demand services are possible with the use of modern technology and better logistics. We are living in a world where a taxi should arrive in minutes and pizza delivered within half an hour. We owe this to the many applications available in the market today,” he says.
It was with this philosophy in mind that the CEO of Conjure Capital Technologies Sdn Bhd created such a service for the banking industry. The company’s mobile app — Advanced Loan Finder (ALF) — is the world’s first on-demand platform that connects loan seekers with bankers in their vicinity.
The app, which was launched last month, is aimed at helping bank relationship managers serve customers in need outside regular banking hours. “Just like calling for a taxi on the Grab platform, customers can now connect with a banker who will service their banking needs at any hour, be it a mortgage, car loan or personal loan,” says Chin.
“ALF will help the user look for a banker outside working hours, doing away with the need to browse websites, visit a branch or phone a call centre to get a loan.”
He describes ALF as a private banking service for retail customers. “Instead of waiting for customers to come to the bank, banks can take a proactive approach and reach out to people who have sent in their loan requests. This app adds a personal touch to how banks deal with their potential customers — you know who is coming from the bank to serve you.”
Two banks — RHB Bank and United Overseas Bank — have already come on board. Chin says the company is in talks with several local and foreign banks and will announce more partners in the near future.
Since its launch, the app has been downloaded more than 100 times and facilitated mortgage and personal financing requests of some RM10 million. Chin thinks the results are encouraging, considering that the company did not run a major marketing campaign. He believes that ALF will especially gain traction among the younger generation.
Chin points out that the app does not provide loan comparisons but acts as a bridge between potential borrowers and their preferred banks. “I have spent time comparing loans and found that the monthly repayment amounts do not differ very much — there may be a RM20 or RM30 difference. But the bank may not be your preferred one and the actual rate offered by the bank may be higher than what is displayed on the loan comparison site. So, I decided to focus on adding that personal touch to the retail customers’ experience instead of doing loan comparisons.”
ALF provides borrowers with estimated market lending rates instead. It comes up with an “average lending rate” by averaging the effective lending rates of the participating banks.
The app also calculates users’ estimated borrowing power — how much one can borrow for a mortgage or personal loan based on his current financial situation. “Your borrowing power changes according to your financial situation, so it is handy to use ALF to calculate your estimated borrowing power from time to time,” says Chin.
He adds that the app will prompt users if they ask for a loan that is higher than their borrowing power. Hence, users can decide whether to adjust the loan amount. However, the app does not stop users from sending the same loan request to other nearby bankers as there may be some who are willing to take on the higher risk, which translates into a higher interest rate.
“Users must remember that the borrowing power displayed is only an indicative amount. Other fees or charges may be computed by the bank for your loan request and your request is subject to a final determination between the user and the bank,” says Chin.
When users are looking for bankers on ALF, they can select their priorities — lowest interest, longest tenure or highest loan-to-value ratio. This will give the bankers an idea of how to meet their needs.
The app focuses on speed — the bankers have the option of responding within 30 minutes. The first timeout on ALF is one minute, which is where the bankers have to respond to the loan request within one minute before the request goes into a tab in their system. After that, the bankers have 30 minutes to respond to the request in the tab before it disappears from their system.
“We only broadcast loan requests in the system up to 30 minutes because a request has to be fresh when the banker responds to it. It is just like booking a taxi or movie ticket — if you do not get one within a certain time, you may not need it anymore,” says Chin.
Only one banker from a particular bank can accept the loan request, he adds. This is to prevent several bankers from the same bank offering the same user with the same product.
“Currently, users have only two banks to choose from. With more banks coming on board in the future, users will have the option of selecting two preferred banks from a list of participating banks,” says Chin.
“The reason we limit it to two preferred banks is that ultimately, users will narrow their choices down to two banks and proceed from there. When you sit down with two bankers from two banks, you can ask them to provide you with the best rate.”
Chin says if no banker responds to a loan request within 30 minutes, it may mean that there is no banker around the area or the user’s debt service ratio looks really bad. If the user wishes to send the request again, he can do so by resending it from his history tab without having to fill up a new request.
Conjure Capital Technologies earns a small fee from the bank when a banker clicks on the app to accept a loan request. The user’s contact details will only be displayed when the banker accepts the request. This is to protect the user’s privacy.
“Only authorised banks [by Bank Negara Malaysia] are allowed to join the ALF platform to offer this service to users. This is to ensure their credibility and prevent fraud. We only ask for the necessary information, and not your identity card number or address. We abide by the laws and regulations such as the Personal Data Protection Act 2010,” says Chin.
As a former banker with more than 20 years of experience, Chin understands the issues in the banking system and has developed the app to respond to some of them. “People often say banks are very slow to respond to changes. This is due to their risk-averse nature. They want improvement, but they will always put safety and security first. We, as a financial technology (fintech) company, are trying to provide banks with reliable tools to improve,” he says.
Chin says the years he spent in the banking industry is what makes him different from other IT companies out to get a slice of the fintech pie. “I know exactly what the banks and customers need and I have assembled them in a platform. I know what the best banking practices are.”
Conjure Capital Technologies was funded by an angel investor based in Hong Kong, who put up RM500,000 just 20 minutes into the company’s presentation on the app, says Chin. He adds that the company already has plans to launch ALF in the region.
The ALF process
1. Download and install the app from the App Store or Google Play.
2. First-time users are required to sign up using their email address and mobile number for authentication purposes.
3. Upon signing in, users have to enter their name, date of birth, gross income and current commitments, including mortgage, car loan and the average monthly credit card payment.
4. The app will display their borrowing power in terms of mortgage and personal financing, based on the details provided.
5. The app will display bankers within a 25km radius from the user’s current location.
6. Users can enter the loan amount, loan type, two preferred banks and priority desired before shopping for a loan.
7. Users will receive an email and in-app notification once a banker has accepted the loan request.
8. The banker will meet the user and service the loan request.
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