Taking out a cash loan in the Philippines is always easy — at least for those who have collateral and the various requirements needed to be able to borrow from a bank and other formal lending institutions.
But for people who neither have the documents (like a bank account, proof of payment, and residency) nor properties that they can use as a security pledge, getting a loan can be a little bit difficult. For them, the last resort is to strike a deal with informal lenders and loan sharks who let them borrow money at a 20% interest rate. These lenders would usually offer loan amounts of up to P5,000, payable within one to three months, but with installment payments collected on a daily basis.
For families forced to engage in such practice, the loans offer a last-gasp measure for them to continue with their lives – but they also end up being buried in debt as they have to borrow more money to pay off the initial loan, and the vicious cycle continues.
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A global technology firm that aims to build the world’s most accessible financial services believes that this practice is no laughing matter and should be addressed more appropriately.
According to Iona Iñigo-Mayo, Senior Director for Global Customer Experience Operations at Tala, it has always been the company’s vision that every person who comes through Tala’s doors will be able to access the right kind of financial product for all their needs.
“We usually get regular customer insights so we can best determine what the best product feature should be in the order of priorities. We also do regular customer insights to be able to serve what they need,” she said.
The company’s credit supply chain is designed specifically to meet a customer’s needs, whenever or wherever they may be.
Unlike in other lending institutions, every transaction at Tala is 100% digital — there is no paperwork, long queues, or even travel needed. Tala customers also get to choose their own due date, so the rates remain fixed (no hidden charges) and you pay only for the days used.
How they do it
Tala is a global financial digital platform that leverages technology to provide inclusive financial services, especially in emerging communities.
According to Iona, “The company leverages modern Data Science and advanced machine learning to be able to assess a borrower’s capability and capacity to pay. We also use technology to offer them the product that they need based on their profiles and their actual financial needs so they don’t end up being mired in debt.”
The Tala executive adds that the company’s core mission is to be able to provide customers with access, and at the same time, to be part of their success story.
“Since Tala’s target market is underserved, most of them do not have the needed documents like proof of income or even proof of residency. If they want to go to a bank to get a loan, for instance, most likely, they will be declined. But at Tala, we have made it very easy, convenient, affordable, and safe. All you need is an ID, an Android phone, and a selfie. You also get a decision right away,” Iona further stated.
When asked why the company decided to serve the underserved market (or those who have no access to formal credit) in the Philippines, Arianne Ferrer, External Affairs Director at Tala, was quick to point out “I think one of the market’s strong suites is it is highly regulated. The regulators are engaging, they are also active and very authoritative, so it allows the growth of companies like Tala to be able to thrive, survive and produce our products. It’s a good combination — both the market and regulators in the Philippines. They allow us to learn, create, and innovate.”
“I also think that a lot of fintech companies today depend on the fact that the Philippines has a very large, young population – we now have 115.6 million people. Thanks to the pandemic, and easy smartphone access (84.6% penetration, which is higher than in other developing countries), I think we Filipinos are digitally savvy. Regardless of their income level, one of the things that people want to achieve is to be able to get a smartphone even if it’s a very basic smartphone. And that’s all you need to get access to the data,” Arriane adds.
How it all started
“Our founder and CEO, Shivani Siroya, first observed in Africa that there’s a huge gap between those who have financial access and those who don’t (have),” said Missy Santos, Marketing Manager at Tala. “Seeing that there was really a gap between these two, Shivani realized she had to do something. She thought of ways how she could come up with proof points so she can end up trusting somebody — whom she doesn’t really know at all — with credit.”
“So, she began looking at technology and data points that could possibly be derived from a mobile phone to help give access (to credit) to those who need it most. Shivani started with somebody who regularly sold food on the streets in Kenya. Although this person earned just a small amount of income, her consistency and reliability have enabled her to earn Shivani’s trust,” Missy further stated.
The rest, as they say, is history. Tala opened its first market in Kenya in 2014, followed by the Philippines some 2 years later, then Mexico, and most recently India in 2022. Today, the company has been helping people in these markets to start and expand their small businesses, manage their day-to-day needs, or simply pursue their financial goals.
The company is now also enjoying a 95% repeat rate plus a more than 90% global repayment rate.
What to expect, moving forward
To make more people aware of Tala’s loan products, the company started undertaking “Palengke tours” in key provinces across the country. It also launched an e-wallet app last April that has been designed to offer customers a platform to store and manage their money, such as loan proceeds, as well as to pay off their bills or transfer funds across family and friends.
“This is just another product to help our customers build that financial muscle, which Tala really is also all about,” Iona said.
As it looks to attract more users, the company is now also looking to improve on its financial products like adding installment options and longer tenors for its loans, as well as introducing new features in the e-wallet app.
“One of the campaigns we are looking at is the launch of a rewards and retention program for our borrowers. Other companies may already be doing that, but what we plan to do is to further innovate in that department. So, you can expect that our innovations will be of particular interest to the unbanked and the underserved, our core market,” she added.
For those who find themselves in a similar situation as thousands of other Filipino families in the countryside living off borrowings from informal lenders and loan sharks, Tala says it remains committed to its global mission of instilling hope, like a shining star, to those who need that credit lifeline the most.
More information on how to get a loan from Tala is available on its official website and Facebook pages.