Many Filipinos are already familiar with tycoon John Gokongwei, Jr: one of the richest men in the Philippines, and serial entrepreneur that has a hand in Skype Inc., Cebu Pacific Airlines, a food and beverage empire, and a plethora of other ventures.
Now, John’s JG Summit, through their Hong Kong-based financial tech arm Oriente will be investing Php10 billion in a mobile app with one goal: to provide small-scale loans to the huge chunk of Philippines without bank accounts.
Introducing Cashalo, a loan marketplace.
This move harkens back to John’s own past, where he only received his big break in business when a bank finally gave him a chance and funded his business idea.
Through the collaboration, both companies will be setting up a digital financial services marketplace that will allow unbanked Filipinos to tap into credit—for purposes like starting a business, paying off student loans, or any emergency expenses.
The idea is that instead of setting up a bank account or credit card, Filipinos can apply for loans and establish their unofficial credit all through a streamlined mobile app.
This is in a bid to protect the Philippines from loan sharks.
Image Credit: Entrepreneur Philippines
70% of Filipino families don’t have a savings account in a bank, and yet this segment still owns substantial income and assets. And to make matters worse for loan applications, Philippines doesn’t have a centralized credit reporting company. Most banks have to rely on a database of already existing clients, or find external sources to do their due diligence on a potential loan recipient.
So when the unbanked segment needs a loan, they resort to unofficial ways to get quick money—which includes loan sharks.
Meanwhile, there are more mobile phones than there are Filipinos in the country, with a population that is generally quite tech savvy.
This is the math that adds up to Cashalo, that will eventually grow into a peer-to-peer marketplace, while also helping the people to establish a digital way of managing their wealth.
Loan applications can be made fully online. And when loans are approved, users can either head to a bank or interestingly, opt to receive the money in selected convenience stores, pawnshops, and bill payment centers within 24 hours.
Meanwhile, those already with bank accounts can see funding within just 30 minutes of application.
Users can apply for the smaller loans of either Php3,000 and Php5,000, to be repaid between 15 to 45 days after disbursement. Interest rates are at 2.95% plus a 4% processing fee.
This may be more or less an average rate compared to credit card interest rates, but according to Cashalo, this is comparable to the 20% monthly interest charged by your average loan shark.
To apply, users only need a valid government-issued ID, bank details (if any, for now), and work information.
At the time of writing, Cashalo is only available to employees of JG Summit as something of a beta version to collect real-life use data.
The platform was built leveraging JG Summit’s experience building internet giants, like LU.com and Skype, while Oriente will be providing the know-how of using technology and data science to make use of JG Summit’s vast resources.
“We are creating a digital infrastructure and social ecosystem to fuel financial inclusion, enabling credit and wealth accumulation.”
-Hubert Tai, CEO of Oriente
To hit the ground running, Cashalo is now looking to hire 1,000 people to handle verifications, loan processing and collections from their target of half a million borrowers by the end of 2018.
Cashalo can be downloaded on Android and iOS devices.
Also Read: How Selling Wine Online Got This PH Startup Over US$1 Mil In Valuation
Feature Image Credit: Screenshot of this PAGEONE video on YouTube.
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