Take V: Q&A with SCB Abacus

Take V is a Vertex Holdings spotlight series that dives into the inspiring stories of Vertex’s portfolio founders. In the third installment, we chat with Dr Sutapa, CEO of SCB Abacus. SCB Abacus is a portfolio company of Vertex Ventures SEA & India.

Can you share your background with us and what inspired you to start up?

I'm a mathematician by training. I started my career in management consulting and worked as an IMF economist before venturing into the banking industry. When I first entered the banking industry, I built a risk analytics team. At that time, most lenders were still using traditional data and techniques to risk rank customers while non-lending tech players had just started experimenting with alternative data.

This was a huge gap, not just in terms of technique and technology, but also in terms of thinking and mindset. I believe that access to financial services was (and still is) one of the most pressing issues in Thailand. We still have a high rate of informal borrowing and I know of many young, passionate entrepreneurs who have no choice but to resort to predatory loan sharks to bootstrap their businesses.

To address this pressing issue, I worked with the SCB Board of Directors to set up a separate entity, SCB Abacus, which focuses on serving and unlocking the potential of the underserved segments. Since day one, we focused on building our own tech capabilities to streamline the lending process and improve risk assessment abilities to ensure that any deserving applicants can secure loans for their businesses.

At the onset of SCB Abacus, we were fortunate to have on board experienced tech talents who shared the same vision and build our products as well as team culture together. We stayed focused on this challenge, listened to our customers, and iterated often to ensure that we deliver a best-in-class digital lending experience. We eventually launched MoneyThunder, our flagship digital lending mobile application, towards the end of 2019. We now have more than 5 million downloads with 10x loan volume growth in the past one year. The rest of the journey is still being written.

What was the most challenging task you experienced or decision made when starting up? And how do you advance when there’s no one single right answer?

I think the most important aspect of starting up is to stay focused. There are plenty of challenges and opportunities in the market today. As a budding startup, founders must share the clear vision that we want to achieve.

This comes with guiding principles – what we should or should not do to achieve our purpose, which will help the team to take the right course of action, especially during the hyper growth phase. SCB Abacus’s guiding principle is to offer better access to finance through technology without compromising data security and privacy.

Beyond that, Money Thunder was launched during the COVID-19 pandemic, which was no easy feat for a new product. We had to make many difficult decisions based on unknown variables. Regardless of whether our decisions were right (or wrong), we survived the uncertainties by acting fast, empowering our team, and conducting frequent check-ins to re-evaluate our strategies.

What do you think is the secret sauce in building an enduring company?

For SCB Abacus, we believe our secret sauce lies in our team, tech and trust. I believe in building a strong team of thinkers who share the same aspirations as our company’s. We are selective about whom we hire as we believe that culture is born organically and employees play an important role in shaping it.

One of the core competencies that I would like to highlight, especially for companies at a similar stage as ours, is agility. In early-stage companies, change is the only constant. Every day there is another challenge thrown at us, and every time we talk to our customers is an opportunity for us to build a better product. Our team needs to innovate and come up with solutions quickly and efficiently.

Our in-house technology is another key differentiator. We decided to focus on building our own technology, ranging from machine learning models, AI automation platform and privacy-preserving infrastructure, which has allowed us to remain entrepreneurial and adaptable while our company grows.

Many startups may overlook the importance of trust, especially in the fast-paced tech startup environment. However, at SCB Abacus, building trust is part of our DNA as this ensures long-term sustainable growth and healthy partnerships with our customers, partners and regulators. Privacy, in particular, is an area where we will not compromise on and we are constantly improving our privacy-preserving technique and security features to maintain trust.

What is the one thing you do in business that most may not agree with you on?

We decided to build our business with zero human intervention to offer the smoothest customer experience and sustain long-term growth. As a result, we chose to build rather than to buy core technologies such as identity management, machine learning scoring techniques for underwriting and collection and chatbot services.

We have an uncompromising belief in the potential of the underserved population. Our thesis lies in proving that alternative datasets can provide better behavioral insights than traditional Bureau information, so our digital lending platform features our in-house AI automation and machine learning risk models to assess the repayment abilities of our target market in more detail and with more speed.

We consistently track and monitor not only our business performance, but also our social impact performance to ensure that our actions make a substantial, long-lasting impact on Thai society. As of now, we save 40% of our borrowers from predatory lending.

As the first fintech spin-off in the Thai banking industry, how do you think this will impact stakeholders within the wider lending sector and financial ecosystem?

Thailand has substantial gaps in access to mainstream lending. Today, we see two-fifths of Thais being underserved by traditional banks. Many Thais are micro or individual entrepreneurs who are new to business and face issues such as having an inconsistent income or lacking working capital. Mainstream lenders who use traditional data and risk assessment techniques will deny most of these micro entrepreneurs. As a result, 86% of Thai households have resorted to borrowing from loan sharks to varying degrees, which incurs unaffordable costs.

SCB Abacus aims to fulfil these opportunity gaps between lending from banks and loan sharks by leveraging our in-house AI automation technology and sophisticated machine learning risk models. We believe that in the long run, more funding will be required to make a significant impact. As it is, the total addressable market for alternative lending has reached tens of billions of dollars, and this signifies huge potential for customers seeking access to formal credit lines in Thailand.

To find out more about SCB Abacus, connect with the team here.

Interested in Technopreneurship? Read more here.

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