Singapore-based ADVANCE.AI is launching a credit bureau in the country through a $4-million seed funding from Archipelago Capital Partners which will be used to help Filipino fintech firms, digital banks, and thrift banks provide comprehensive credit data to their clients.

“This investment fits perfectly with our ethos of driving sustainable growth across Southeast Asia, creating value for local businesses and investors alike, and in fostering growth in sectors that will benefit from rising income levels and increased consumer demand in the region,” Archipelago Capital Partners chief executive officer Jovasky Pang said in a statement on Tuesday.

Seed funding

The seed funding for ADVANCE.AI’s Credit Bureau Philippines (ADVANCE.CBP) will help Philippine lenders generate accurate credit scores using its artificial intelligence and other digital tools.

Credit scores allow lenders to better gauge consumers’ capacity to repay loans so they can maximize loan benefits to purchase assets or start their own businesses.

Thus, credit scores also reduce risks to other borrowers and depositors of financial firms.

“The investment will help develop a more equitable and inclusive financial ecosystem for all Filipinos. The credit bureau not only empowers lenders and borrowers but also results in a more robust credit reporting and scoring infrastructure in the Philippines,” ADVANCE.CBP chief executive officer Dennis Martin said.

Special accessing entity

ADVANCE.CBP has been authorized to operate in the country as a special accessing entity under the rules of the Credit Information Corporation, which consolidates credit data of borrowers nationwide in compliance with Republic Act 9510.

Founded in 2016, Singapore’s ADVANCE.AI, the parent company ADVANCE.CBP, has built a Philippine client network that includes finance companies, cooperatives, and banks, such as Skyro, Inception Technology and Traxion Tech.

With the growing use of mobile apps, the Bangko Sentral ng Pilipinas will open applications for four more digital banks in the country on 1 January as it aims to make digital loans more accessible to Filipinos.

According to a report by global business consultancy McKinsey & Company, Philippine digital banks quickly grew their market value to $3 billion between January 2021 to January 2023 mainly due to deposits and e-payments.

“On the other hand, the growth in lending is not that fast because they just started their operations, and lending is not quite easy because clients should have a very good credit score. Digital banks are also still studying their target market carefully,” BSP Deputy Governor Chuchi Fonacier said.