CTBC Bank (zhongguo xintuo, one of Taiwan’s largest commercial banks) recently partnered with LINE Pay, allowing users to apply for credit loans through the “Loan Zone” within LINE Pay. The service is called the “CTBC Online Loan” digital platform. CTBC originally launched this service back in 2017 and has successfully migrated 96% of the bank’s total credit loan applications to the CTBC Online Loan platform this year, with 90% of those applications submitted via mobile devices. This has largely achieved the goal of making “loan applications” a seamless part of everyday life.
Based on the press releases published by both parties, LINE Pay primarily serves as a “loan referral channel” in this partnership. The announcement mentions that after a user submits an application, CTBC evaluates customer risk through its big data database, advanced modeling techniques, and intelligent underwriting rules — with no mention of extracting any user data from LINE Pay for the assessment. Even so, leveraging LINE Pay’s 8.4 million users as a referral pipeline makes this Taiwan’s first online loan application service channeled through an electronic payment platform.
If partnering with an electronic payment platform for loan referrals is step one, what comes next?
We can look to Grab, the rising fintech giant of Southeast Asia, for reference. Grab is a ride-hailing app that originated in Malaysia in 2012. After securing a USD 2.5 billion Series G investment from Japan’s SoftBank in 2017, Grab began expanding into Grab Delivery (a C2C parcel delivery service), Grab Food (a food delivery service), and Grab Finance (financial services), with Grab Finance being the most diversified among them.
Since banking and financial service penetration in Southeast Asia is relatively low — nearly 70% of the region’s 600 million consumers have never used a bank’s financial services, which is 30% higher than the global average — Grab Finance leveraged Grab’s user base of 187 million users and 2.8 million driver partners. It first launched GrabPay in 2019, and by 2020, 77% of Grab transactions were conducted using GrabPay. In January 2019, Grab also formed a joint venture with ZhongAn Insurance to establish an insurance company, offering insurance products to both drivers and consumers. More recently, Grab acquired Bento and planned to launch automated micro-investment products. Most importantly, lending products were expected to be the major revenue driver for Grab Finance going forward.
Starting in 2019, Grab embedded personal loan application services within its own Grab app. The stages of Grab and Grab Finance’s lending collaboration may help us envision how electronic payment platforms and financial institutions can work together to offer loans. Stage One: Similar to the LINE Pay and CTBC partnership — leveraging a super-app with massive traffic to funnel users toward loan applications, without any data exchange involved. Stage Two (Deferred Payment): PayLater. For users who make recurring payments on Grab using GrabPay, this service allows them to accumulate multiple payment amounts and settle them at a unified time. As long as users pay on schedule, no interest is charged. This type of lending operates with Grab Finance advancing the funds to GrabPay. Stage Three (Consumer Loans): For consumption needs on the Grab platform, GrabPay provides relevant payment amounts and user data to Grab Finance for loan assessment. Once approved, the funds are disbursed directly to GrabPay for the user’s purchases. Stage Four (Using Data for Credit Assessment): GrabPay provides payment and revenue data for each driver who receives payments through GrabPay on the Grab platform. This data is shared with Grab Finance for analysis, which then offers loans to drivers. The revenue data flows from GrabPay to Grab Finance for analysis, and Grab Finance disburses the loans into the drivers’ GrabPay accounts.
As for whether LINE Pay will follow these stages and partner with financial institutions to roll out related lending products in the future, only time will tell.
Related links: Partnering with LINE Pay, “CTBC Online Loan” service goes live: https://pros.is/39tw47 CTBC “Online Loan” official webpage: https://pros.is/3a8er2 Grab Wikipedia page: https://pros.is/3atgn4 Mobile payment adoption is difficult in Southeast Asia — consumers don’t even use bank accounts: https://pros.is/3aenth Grab Facts and Statistics (2020): Grab Statistics https://pros.is/3aqvuz