Boost, a regional FinTech firm, becomes first fully digital financier to secure investment grade A1 rating in Southeast Asia
Boost, a regional financial technology (FinTech) provider, has announced that its maiden tranche of Senior Class A Medium Term Notes (MTN) has been rated A1 by Malaysia-based, RAM Rating Services Berhad (RAM Ratings).
This establishes Boost as the first fully digital regional financier to receive an investment grade A1 rating for its securitised Malaysian receivables. The FinTech giant, which provides services spanning payment services, alternative lending, digital insurance, content services and merchant solutions, is the fintech arm of Bursa Malaysia-listed Axiata Group Berhad. Boost currently operates primarily in Malaysia and Indonesia, the firm said in a press release.
The A1 rating was awarded on the back of a commendable non-performing financing (NPL) rate of less than 3 per cent from funds disbursed to finance Small and Medium-sized Enterprises (SME) customers' working capital, supply chain and invoice financing to help them grow their businesses.
Commenting on the A1 rating, Sheyantha Abeykoon, Chief Executive Officer of Boost, said, "We are glad to once again, set the standard for an industry which is at a very nascent stage, but has immense potential. The A1 rating of the securitised tranche is a testament of the quality of our financing portfolio and the robustness of our alternative lending platform. Our digital-first solutions are simple and conveniently available to customers, incorporating a comprehensive e-Know Your Customer (eKYC) with a 3-minute digital application journey supported by AI and machine learning tools,"
"We anticipate this rating will help diversify our capital base, enabling us to further support more SMEs. We are wholly focused on our aspiration of championing financial inclusivity, and we are excited at the prospects of serving more SMEs as we move towards becoming a full spectrum regional fintech player," added Abeykoon.
With the ongoing digital acceleration, there lies a greater opportunity to make finance more accessible. The rating exercise further underscores Boost's capabilities and competencies in accelerating financial inclusion through Boost Credit (formerly Aspirasi) in using robust alternative data scoring frameworks to underwrite credit. Since its inception in 2017, Boost has been striving to leverage on opportunities to further widen its reach and positively impact underserved and unserved segments.
Gurpreet Khera, Chief Business Officer of Boost Credit commented, "The A1 rating is a significant milestone in our journey of building a truly Digital Bank, and a natural progression to provide comprehensive digital financial services for the region. The rating also reflects our commitment to continuously improve our product offerings as we envision a financially inclusive ecosystem in Southeast Asia."
The securitised receivables rating provides reassurance to potential investors about Boost's operational capability to support such exercise. It also signals to stakeholders that its products have been vetted and meet the requirements for the securitisation exercise under an A1 rating. The rating is applicable to the Senior Class A Medium Term Notes with a tenure of 30 months, and will be issued by a Special Purpose Vehicle (SPV), Salvare Assets Berhad and reviewed on an annual basis. Boost intends to issue more MTN tranches as it grows its financing portfolio to meet the needs of SMEs.
According to a report by Fitch Ratings, titled "South-East Asia's Fintech Landscape: Rising Digital Adoption, Large Underserved Market to Fuel Sector Growth", SEA has a population of over 580 million at end-2020, of which more than half were unbanked.
In three short years of operation, Boost Credit has disbursed more than SGD390 million (RM1.2 billion) to SMEs in both Malaysia and Indonesia. Applicants enjoy a 3-minute digital application journey with a quick approval process to meet their financial needs to grow their business.
In July 2021, Boost announced a formal partnership with RHB Bank, Malaysia's fourth largest, fully integrated financial services group to form a consortium and bid for a digital bank license. The consortium was one of 29 formal applicants received by Malaysia's central bank, Bank Negara Malaysia (BNM), under the Financial Services Act 2013 and the Islamic Financial Services Act 2013, following a 6-month application period which ended on 30 June 2021. It is anticipated that up to five successful applicants will be granted a license by the first quarter of 2022.
Last year, the Monetary Authority of Singapore (MAS) approved the country's first digital banking licenses. Four licenses were issued with two each for digital full bank license (DFB) and digital wholesale bank license (DWB). In Indonesia, there are already seven digital banks and another seven are pending licences from the Financial Services Authority (OJK).