Monday, May 17, 2021

Small money, big business


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Austrian expat puts finance help a click away
An Austrian who has traveled around Southeast Asia is now based full-time in the Philippines, where he put up a financial technology start-up, pioneering an automated way for customers to assess financial services online.

Georg Steiger is the CEO and co-founder of First Digital Finance Corporation (FDFC), opened in 2015. So far, the company has been successful in enabling customers to build their credit history and transition from informal and expensive lenders to the formal financial sector.

Georg Steiger

Easy to reach
At present, FDFC’s network is only in the Philippines, but Steiger insists he wants to see the company grow in the coming years. “We are growing and investing. A year ago, we were basically all squeezed into one little office in Manila. We just rented our Makati office a few months ago because we want to give two options for people to work in.”

Majority of FDFC’s employees are still in the company’s T.M. Kalaw office in Manila. “Our Makati office is a bit bigger than what we need,” says Steiger. “But we’re hiring more people for credit and customer service to fill up the space.”

He attests it’s very easy for their customers to reach them to get updated since they have adopted digital processes. They communicate through e-mail or Messenger, unlike with the banks where a customer normally needs to make a phone call.


“We’re Internet-based, so it’s faster and very easy to access our services from pretty much anywhere,” Steiger says. “One of the first segments that we’re focusing on is the group of OFWs [overseas Filipino workers] and the seafarers. That’s a pretty big and interesting segment. Because they’re at sea and they’re all over the world, that also makes it a little bit difficult for banks to serve them.”

Since FDFC started in 2015, the company has introduced services that have become popular and successful with Filipinos. Balikbayad is a digital lending platform and the first product launched when FDFC began three years ago. Overseas workers and seafarers are central to the design of the platform. Balikbayad eliminates intermediaries and removes lengthy screening process and tedious paper work common to banks and other lending companies.

“We have good feedback from customers who are mostly very happy with the service,” Steiger says. “We still hope to grow it [Balikbayad].”

Loan Ranger is the second service that FDFC launched in 2015. The service is for local customers and provides emergency cash online up to a maximum of P10,000.

Steiger explains: “You go to the website and fill in your data. If we can make a decision instantly, say you have a record in the credit bureau and you’re a good customer, then we can give an instant feedback. Otherwise, we have to look at the documents and it takes a few hours.”

No plastic
BillEase is FDFC’s newest product launched a year ago, the first of its kind in the Philippines and the one the company is very excited about. Launched with Lazada, the biggest e-commerce website in the Philippines, BillEase allows customers to pay Lazada by installment.

“This is a modern version of a credit card without any plastic, but you just have your account,” Steiger says. “It’s very common in the malls to buy things through installment, which allows for online shoppers.”

So far, the reception to BillEase has been pretty good since online shopping is booming, according to Steiger. “We hope to expand it. We still see a lot of potential in the Philippines.”

Steiger brewing beer at home; a day out in Taiwan’s Taroko Gorge (below)

Steiger, who has worked across Southeast Asia—Vietnam, Indonesia, Thailand, Malaysia and the Philippines—was born in Vienna, Austria. He finished his undergraduate studies at the University of Vienna, but left for his master’s degree in the United States in 2003. He obtained his MBA (Master of Business Administration) diploma from Indiana University Kelley School of Business in Bloomington, Indiana, in 2005.

“I moved eastward,” Steiger says. “Since then, I’ve been pretty much on the road everywhere.”

After graduation, he worked as consultant for McKinsey and Company in Zurich, Switzerland, for two years, then moved to McKinsey in Singapore for another six years, before settling in the Philippines in 2015. In 2013, he started John Galt Ventures as its founder and managing director. He co-founded FDFC, among several other ventures.

Promising market
“The Philippines is a very promising market to start a business in our sector,” Steiger notes. “This is our first market. There’s a lot of opportunity here. This is a pretty big country with over a hundred million people. There are still a lot of gaps in terms of what is being served by the banks versus customers who don’t really have enough service.”

Steiger’s co-founder at FDFC is Ritche Weekun, his former colleague at McKinsey, who is a veteran banker with expertise in the regional mortgage business. He studied business at Babson College in Massachusetts and obtained his MBA at Arizona State University.

Also a co-founder is Huyen Nguyen, Steiger’s former McKinsey co-worker. She graduated summa cum laude at Wesleyan College in Georgia, where she took up Economics and Mathematics. She has served in senior leadership roles at several private companies.

Even if Steiger is Manila-based, he continues to scour the region. He co-founded Camdonhanh, Vietnam’s first online pawnshop, and also put up a leading micro-finance business in Vietnam. “The FDFC might not just stay here in Manila,” he says. “In the medium term, we are also looking into other markets in Southeast Asia and traveling a bit.”

Steiger says being flexible in processing papers for their customers gives the FDFC a big advantage over average banks. “We have really taken a look at the process. We still ask the customers to come to the branch to still sign their own documents, but everything is scanned. Everything is digital.

All accounted for, from left, Jonathan Ong, Head Business Development Balikbayad Ritche Weekun and Huyen Nguyen, Co-Founders of FDFC and Steiger. Behind them an unidentified former colleague

“If you will contrast it to the typical process with an average bank in Southeast Asia, they will usually ask for your documents, they make a credit file in physical paper, send that to head office that sometimes discovers there’s something missing, so they send the documents back. You already lose two weeks sending the documents back and forth.

“Since our process is fully digital, that doesn’t happen to our customers. In our system, they send to credit, credit looks at the documents and if there’s any question, they can follow up immediately.”

Flexible processes
Just using the documents that are available and being flexible in the credit process, the FDFC can release some of the loans on the same day. He says: “There are customers who come in the morning and say: ‘I’m leaving tonight.’ We still try to accommodate them. We streamlined the requirements that we need.”

Steiger has always dealt with businesses anchored on money. Yet, he insists they deal more with small money and focus on retail customers who cannot be served well by the banks. “We don’t want to just duplicate what the banks are doing,” he reasons. “There are many customers who are pretty well served by the banks. That’s not what we’re targeting. We are targeting customers who are either too complicated or too small for banks to serve.

“What I find fascinating about credit is it’s really helping both sides. On the one hand, you have customers who need money for something. Let’s say our OFWs, they have an opportunity to go abroad, double or triple their salary, but they need money to make that happen.”

Steiger says these people are the breadwinners who need to leave a little money with their family. “They want a little bit of a safety net because they don’t know when they will get their first salary. By facilitating that loan, you can really give these people a big opportunity to increase their earning potential and with that, also the life of their entire family who are depending on them.”

Understandably, there is a downside since there are a lot of risks involved with money. Not every customer pays back. The last resort, according to Steiger, is to get them to the police. “But first, we try to work with them. We try to look at the reasons for them not paying. There’s often a reason.

“We help them try to restructure the loan. As long as the customer is willing to work with us, we will always try to find a solution. That’s really the majority of cases, to be honest.”

There are also those who hide from them. When that happens, the FDFC people try to call them and contact them in any way they can. “In the end, we have to balance a little bit. Because if we have too much risk, the rates will be too high, so we need to find a solution that works for everyone. The last resort is to enforce the contract and file a case.”

“You estimate how many people who are not willing to pay you back. You kind of have to price that in, right? If you estimated that correctly, there isn’t really too much disappointment. But as long as customers are willing to find a solution, we are also willing to do the same.”

“Fundamentally, these are good guys. They care for their family. They still want to find a solution. We’ll make it work, somehow. Luckily, that’s really the big majority of the customers. The ones who basically say, ‘No, I’ll take the money and run,’ of course, also exist. But that’s only a small percentage.”

Steiger, whose first name “Georg” is pronounced as “Gee-yorg,” starts his day like pretty much everyone else—“in traffic.” He doesn’t drive in Manila, so he uses his time inside the car or does a little work. He visits the FDFC’s offices in Makati and Manila. His day is usually filled with meetings.

In his first years in the country, Steiger visited Cebu, Davao, Bohol and Palawan. “I did a lot of traveling in my first three years, then I got a bit lazy,” he admits. “Now, I like to spend my weekends with my two kids.”

* * *

The Steiger guide
Georg Steiger first met Asia in 2003, backpacking through Thailand, Laos and Cambodia. He then travelled extensively around the region. Here are must dos in some of his fave cities.

• Singapore: Explore hawker centers. Travelers can have good local foods here at reasonable prices.

• Bangkok: Take a boat tour around old canals. This is a fantastic way to get an authentic glimpse of the city and discover how its waterways played an important role in its rich history.

• Ho Chi Minh: Visit little coffee shops and craft breweries. The French might have started the coffee culture in Vietnam, but it’s the locals who’ve molded it into something of their own.

• Manila: Tour Intramuros. Filipino culture is a mash up of various cultural influences, foremost of which is Spanish. Visit Intramuros to learn about the Spanish colonial rule, which will help you understand the general Pinoy psyche.

• Taipei: Shopping at local wet markets. No one should leave without experiencing the traditional wet markets, especially Taipei’s night market.




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