GXS disburses over 100,000 loans in first year, aims to double it in six months 

GXS Bank has disbursed over 100,000 loans in the first year of its FlexiLoan product, targeting gig workers and underserved segments typically overlooked by traditional banks.

The digital bank is tapping data from its ecosystem partners Grab and Singtel to better understand its target segments and provide them credit scores, said Jenn Ong, head of retail at GXS.

“That allows us to onboard customers that financial institutions find hard to onboard,” she said.

Ong said that the average loan size differs by segment, with the younger segment – mainly new customers with little to no credit record – taking out between S$2,000 to S$3,000. GXS is also seeing interest in its FlexiLoan scheme not just from the underserved segments, but also well-served segments that can draw up to S$40,000 in loans.

The FlexiLoan product acts like a hybrid between a line of credit and a typical short-term loan, allowing a customer to draw down the amount approved for disbursement.

Ong said this flexibility provides “peace of mind” since customers can take out an amount they need, rather than the total loan amount. “If you use S$2,000 out of a S$20,000 line of credit, I only charge you interest on the S$2,000,” she added.

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One key aspect that differentiates the FlexiLoan product from a typical short-term unsecured bank loan is that interest is calculated daily, and early repayment is allowed. This means that customers can make a repayment at any time during the month and pay less interest on a smaller principal.

This has helped customers save about S$4 million in interest in the last 12 months, said Ong. Traditional banks calculate interest on a monthly basis, making any repayments before the scheduled repayment date moot in reducing the interest amount.

“We want to give customers a chance to see what is different, and the numbers have proven themselves,” said Ong, referring to the high disbursal rates.

For the first year of its loan product, GXS is looking to nurture good payment behaviour from borrowers to build their credit scores. Nudges about repayment and education about their credit records are important in aiding customers to eventually increase their borrowing limits.

The non-performing loan ratio remains below the industry average, but this is because the product is still in its infancy.

“We have always started with lending small first, then, based on the customer’s behaviour and repayment ability, we will increase the limit,” said Ong.

With the current high costs of borrowing, she believes that the FlexiLoan approach is resonating with the wider population now.

GXS is looking to double the amount of loan disbursals to over 200,000 in the next six months. The plan is to allow the product to serve more customers, besides the current target audience of gig workers and thinly served young adults.

“In the past six months, the average loan amount taken by GXS FlexiLoan customers has grown by 30 per cent,” said Ong.

There is some growing traction with the general public that is already well served by the traditional banks. Even the mass-affluent segment, which typically comprises those with over S$100,000 in assets, is looking to tap the FlexiLoan product.

“The next step is to double our disbursed loans and expand acquisition to the mass and mass-affluent segments,” she said.