Tag: FICO

Indonesia – In the middle of businesses taking their recovery from the after-effects of the pandemic, almost half of Indonesian small businesses, or 44%, plan to consider alternative and non-traditional lenders moving forward, this is according to a new report commissioned by analytics software company FICO. 

This percentage reflects the Indonesian SMEs that expressed interest in trying new borrowing products in 2022 with 45%. APAC-wide, SMEs are citing dissatisfaction with their main banks. The report found that 62-70% of APAC SMEs are less than satisfied with their main bank’s level of support in response to the COVID-19 outbreak.

The report noted that the insights indicate early signs that traditional banks in Indonesia are at risk of losing SME business to non-traditional competitors.

The top drivers for Indonesian SMEs in choosing a funding provider are competitive interest rates (49%), ease and speed of application process (39%), and the ability to gain the lending options or credit line suited to their needs (33%). 

“The pandemic put a sudden, massive burden on SMEs, globally, and they didn’t think banks did enough to help them,” said Aashish Sharma, senior director of decision management solutions in Asia Pacific for FICO. 

“Indonesia’s SMEs have made it clear that they require financial support in 2022 but are less optimistic about getting it from their main banks. This is a potentially worrying trend for traditional banks, considering there are over 62 million SMEs in Indonesia, which is one for every five Indonesians,” Sharma added.

The report noted that banks need to understand what’s causing SMEs to consider alternative funding sources. SMEs across APAC pointed to frustrations with the typical funding process of traditional banks and identified room for improvement in specific areas which is led by access to credit (70%), followed by financial assistance (69%), and information and guidance (68%). Meanwhile, businesses in the region also said traditional banks must improve with regards to transparency in decisions and processes (68%) and speed of response (64%). 

Taiwan – Brands and services are often expected to be mind readers. A number of times, consumers don’t always know what they want, until you show it to them, but that brands must also act sly – not all times are consumers willing to ‘cooperate’ and ‘talk’ with brands, and they just want their needs to be handed on their laps–ASAP. 

A new insight from a report done by global analytics firm FICO points out that it might just be the opposite for the said customer-brand relationship. 

First, about 73% of Taiwanese consumers say they are not satisfied with generic credit offers from their bank. With this, it came out that one in five Taiwanese are “very willing” to offer more financial information to be granted preferential pricing, while half are “somewhat willing” to do so.

According to the report, many banks in Taiwan do not have a comprehensive pricing strategy that aligns with the organization’s overall business strategy, yet customers are extremely willing for banks to make them offers that consider their total customer relationship. 

The report notes that innovative pricing strategies have been the name of the game in the industries of airline, ride-sharing service, and insurance and that it’s safe to say that banks are lagging behind.

“Clearly there are opportunities for banks to move past single-product pricing and engage in improved cross-selling and increased product penetration. Banks may have gotten away with this so far due to the high inconvenience cost for customers of moving to a competitor, but with increased competition and the regulatory trend of open banking, we see this changing quickly in the next three years,” said Aashish Sharma, FICO senior director of decision management solutions in Asia Pacific.

Another finding from the report agrees with the call for personalization, where more than half, or 53% of Taiwanese, had a positive reaction to offers that took into consideration their circumstances. 

APAC banking customers are very receptive to personalized credit offers

The study was conducted across 10 countries in Asia Pacific, and it found that there had been broad discontent from consumers in the region with the experience of taking up new products. About 34% said they were not offered any attractive incentives such as better rates, and gifts, while 31% said the bank failed to offer them a superior product to the one they applied. Meanwhile, 28% said the bank failed to offer any additional products to their liking.

“Lenders are cognizant that to compete effectively in today’s retail financing environment, speed to market and pricing features may be insufficient and the greatest value-add is centered on products that are bespoke and tailor-made to meet the specific needs of the customer,” Sharma said.