YANGON – Yoma Group plans to use credit analysis technology to help it review loan offerings to consumers and small businesses, with support from Chinese e-commerce giant Alibaba Group Holdings, as the conglomerate Burmese seeks to tap a market of over 40 million unbanked residents.
The plan is currently in the preliminary discussion stage between the two groups.
The new technology likely includes artificial intelligence to calculate the creditworthiness of consumers and business operators by examining utility payments and purchases through the app. Based on these credit scores, Yoma, which has operations in real estate, retail, healthcare, automotive, among other industries, will match applicants with lenders.
Mobile banking apps developed by Alibaba and rival Tencent Holdings in China have grown rapidly, giving financial access to those living in rural areas and small businesses who otherwise could not get loans from conventional banks. Only 24% of Myanmar’s population have bank accounts, according to data from the International Monetary Fund.
Yoma to integrate credit analysis technology into its mobile payment application launched in 2018 to diversify its mobile financial services, under the Wave Money brand, while minimizing the risks.
“For people who currently cannot borrow money because they do not have a credit history or do not have access to the required documents, Wave Money can provide a channel for these people to get money. “Melvyn Pun, CEO of Yoma Strategic Holdings, a core company in the conglomerate, told the Nikkei Asian Review.
“Myanmar is held back because the financial services sector is very inefficient,” Pun said. “It was hard to move money. And it’s hard to store money safely, and it’s hard to borrow money when you need to borrow.”
Yoma will use the sales data it acquires when consumers use Wave Money to pay for their purchases. This data will be analyzed to help generate store credit scores as well as consumers. Yoma hopes to increase the number of Wave Money app users roughly 10-fold to 11.2 million or one-fifth of the nation’s population by 2024.
Yoma jointly launched Wave Money with Telenor, a large Norwegian telecommunications company, as a remittance tool in 2016. Some 58,000 merchants, mostly small shops in towns and villages, are the point of transaction for users. to cash in and out.
The use of Wave Money in Myanmar tripled in 2019 from the previous year to 6.4 trillion kyat ($ 4.7 billion).
In this next stage of application development, Yoma will accept a $ 73.5 million investment in November from Ant Financial Services Group, an Alibaba subsidiary that operates the online payment platform Alipay. In addition, Telenor will sell its stake in Wave Money to Yoma.
As a result of these transactions, Wave Money will be 67% owned by Yoma and the remainder by Ant.
“In China, nobody can use cash anymore, but everyone just uses the phone. Hundreds of millions of loans are processed every day and it is very well automated and very capable of matching lenders to people who would need to borrow at the right price, ”Pun said.“ This is something we’re looking to do with Ant to improve [our] financial platform. ”
The bulk of Yoma’s business was real estate development. Considering the increase in the number of middle-income consumers in Myanmar, however, it has positioned consumer-oriented businesses as a critical development area and has branched out into restaurants, healthcare, tourism, the sale of automobiles and other sectors. The company hopes that Wave Money borrowers will be attracted to its other activities.
Competition in Myanmar’s e-money market has intensified since 2018 as financial institutions and mobile operators entered the fray.
KBZPay offered by KBZ Bank, MPT Money by Myanmar Posts and Telecommunications and about eight others follow Wave Money. KBZ Pay, which is in partnership with Chinese company Huawei Technologies, facilitated transactions worth 2.8 trillion kyat in 2019, just one year after its launch. Yoma intends to strengthen Wave Money’s leadership position as a pioneer by offering loans.
The coronavirus outbreak has helped businesses in this industry as consumers move away from physical money. In addition, the government encourages the use of mobile payments as part of its economic policy.
Payments through the Wave Money app during the March-May period, when the government imposed restrictions on movement, are believed to have increased nine times in value compared to the same period last year. KBZPay has also seen an 87% increase in peer-to-peer transactions since April.
“The potential benefits of mobile money have been increasingly highlighted during the pandemic,” said Claire Cranton, communications director of GSMA, a London-based industry body representing the interests of mobile network operators. in the whole world.