In Southeast Asia, demand for digital lending solutions is on the rise, driven by shifts in customer expectations, regulatory changes, and heightened scrutiny of environmental, social and governance (ESG) considerations.
Chris Kneen, Chief Commercial Officer of Axe Finance, a digital lending specialist, spoke to Fintech News Singapore about the booming business in emerging markets, particularly across Southeast Asia, the Middle East, and Africa, where banks are heavily investing in their digital transformation efforts.
“We had a bit of a hiatus during the pandemic, but we’ve seen an increasing demand in the last two and a half years where there’s a real surge, especially in Southeast Asia, the Middle East and parts of Africa,” Kneen said. “We’re seeing a real acceleration in banks’ need to service their customers in a digital way, but also keep pace with rapidly changing regulatory and compliance environments as well.”
Banks are facing mounting pressure to offer seamless and convenient digital experiences while also adapting to changing regulatory frameworks surrounding know-your-customer (KYC) and anti-money laundering (AML), he said. Legacy technologies are hindering this adaptation, prompting increased investments in digital solutions.
The growing digital maturity of APAC, coupled with the rise in cloud computing, is also driving the adoption of third-party banking software solutions. While many banks in the region still rely on on-premises technology, Kneen noted a shift in regulatory acceptance of cloud infrastructure as compliant with financial regulations. This trend, combined with major investments from tech giants like Google, Amazon, and Microsoft in local data centers, is expected to accelerate the region’s digital lending growth.
Cloud adoption in APAC has lagged behind more developed regions, largely due to the region’s complex regulatory environment. Countries like Indonesia and Malaysia have implemented strict data sovereignty laws that require data to be stored and processed within their borders. However, the availability of localized cloud solutions remains limited, creating challenges for businesses seeking to adopt modern digital solutions.
A global leader in digital lending
As a result, Axe Finance expects to onboard more new customers this year than ever before. The company, which claims a user base of around 50,000 from more than 35 countries, boasts 20 years of experience in delivering digital lending solutions for financial institutions worldwide, serving the likes of Société Générale (with banks in more than 13 international subsidiaries), OTP Group (with 11 international subsidiaries from the CEE region), VIB and VCB from Vietnam, Al Rajhi Bank from Saudi Arabia, Bangkok Bank from Thailand and QNB Group from Qatar.
The company has also been named as a leader in Commercial Loan Origination and Retail Loan Origination Systems provider in the 2024 SPARK Matrix for Retail and Commercial Loan Origination Systems by QKS Group and recognized in the 2024 Gartner® Market Guide for Commercial Loan Origination Solutions.
Its flagship product, the Axe Credit Portal (ACP), is a composable and modular end-to-end digital lending platform that covers all stages of the credit lifecycle. The platform is cloud-agnostic and supports diverse client segments, by offering deep customization to meet specific client needs. It uses no-code configuration tools and integrates smoothly with core banking systems and other third-party systems to ensure efficient data flow.
“We have enabled one of our customers to shorten the retail loan process from days to minutes. So if someone applies via a digital portal with this particular bank, they can complete a credit card application within minutes, whereas previously that used to take days. That particular bank has won awards for this new digital credit card solution because it was a game changer in that marketplace,” Kneen said.
In recognition of the company’s success, Axe Finance has also been selected as one of the finalists at the upcoming SFF Fintech Excellence Awards, in conjunction with the Singapore Fintech Festival (SFF).
Empowering digital lending operations with AI
One of the key highlights for the ACP is the implementation of Artificial Intelligence (AI) capabilities. This technology has further enhanced automation, user efficiency, and customer experience.
“A lot of those capabilities that we’ve been developing over the last 20 years are now being accelerated and further enhanced by the introduction of AI,” Kneen said.
ACP’s innovative digital lending currently integrates over 10 AI applications across the credit lifecycle including customer risk profiling, micro-segmentation, face recognition, Identity verification, Content extraction (Payslips, financials), scoring and credit eligibility rules, Sentiment analysis, Adverse media, Multi-class automatic decision, and EWS & delinquency prediction.
Addressing the demand for ESG compliance
Kneen also touched on the rising importance of sustainability in banking practices, with financial institutions looking to align with ESG standards. In response to this, Axe Finance has developed an ESG module within ACP that automates compliance checks during the credit assessment, enhancing efficiency and ensuring alignment with sustainability goals.
Kneen provided examples of efficiency gains, highlighting the role of the ACP ESG module in enhancing ESG screening efficiency at Fidelity Bank in Nigeria.
“Fidelity Bank in Nigeria adopted the ESG module and now screens 99.5% of their ESG requirements automatically in ACP,” Kneen said.
“All of these automated checks represent a real efficiency gain for them. Also, the module ensures that it’s meeting the bank’s own portfolio risk strategy.”
A unified solution for multinational organizations
Kneen added that recent updates to ACP have enhanced its capabilities to support multinational organizations, which often seek a unified solution capable of operating across multiple jurisdictions. It now offers a single platform that’s able to handle multilingual, multi-currency, and multi-entity operations, but which also allows for localized specificities.
“A lot of the banks that we have been dealing with have grown themselves and I think we’re seeing … an increasing number of banks looking for a single solution that supports multiple geographies,” Kneen said.
“We now have customers that have a single unified platform that covers all of their subsidiaries, but then give these subsidiaries the ability to comply with local regulation. These subsidiaries have different data sources that they need to call upon, such as credit bureaus, fraud databases, AML databases. This differs from country to country. The regulatory landscape is different from country to country as well. So that’s what we’ve built into the later versions of ACP: that ability to have a unified platform, but with localization enabled for individual markets or individual business segments.”
Kneen also highlighted the successful implementation of the technology across 11 countries for a large European group for the corporate lending segment. A template was created for the headquarters to meet 80% of the group’s requirements, while the remaining 20% addressed localized specifics, speeding up the implementation process for each country.
Axe Finance will showcase the latest version of ACP, version 9.9 backed by containerization technology, at this year’s Singapore Fintech Festival (SFF). The company will highlight its latest innovations in AI-powered digital lending, the integration of ESG factors into the credit journey, and ways to accelerate loan origination, servicing, compliance, and collections.
Register at this link to make an appointment to meet Axe Finance’s expert at their booth at SFF.