Letters | What China’s fintech giants can teach Southeast Asia about banking on agents
- Since their target customers generally have minimal banking experience, fintech firms tend to use agents to recruit them. Although the use of agents increases efficiency, concerns remain about data privacy and compliance with regulations
With all due respect, I would like to share some observations, drawn from China’s experience, to urge caution.
While the rise of fintech or financial technology has offered more convenient and cost-effective banking services, it is predicated on one assumption – that people fully comprehend and trust banking services offered online.
Sadly, this is not the case for the unbanked/underbanked population with minimal experience with banking services, which have been deprioritised by traditional financial institutions. Therefore, human intermediaries become their stepping stone to innovative banking services.
For example, one such intermediary in China hosts a three-tiered network of individual agents targeting customers in less-competitive “below Tier 3” cities, and rural areas. Their agents reach out to and help consumers apply for consumer loans provided by online lenders whose credit decisions are driven by data without any paperwork.
Some big tech firms also opt to use agents. For instance, the fintech arms of China’s biggest internet giants have cooperated with telecom operators to provide instalment loans to customers purchasing cellphones at their stores, with in-store agents facilitating the loan application process.