PETALING JAYA: CGC Digital Sdn Bhd, Malaysia Digital Economy Corporation (MDEC), and Payments Network Malaysia (PayNet) have signed a collaboration agreement aimed at driving financial empowerment and fostering inclusivity among micro, small and medium enterprises in Malaysia through pioneering Alternative Credit Scoring solutions.
This tripartite partnership signifies a collective commitment to address a RM90 billion gap in financing for MSMEs.
The digital tool to power the bridging of the financing gap will be the Alternative Credit Scoring undertaken by CGC Digital as it explores alternative data to facilitate the development of its model. The partnership will be led by CGC Digital in providing the digital guarantee, MDEC in connecting fintech players and championing policies/frameworks, and PayNet in utilisation of its payments data.
PayNet as the national payments network has over the years aggregated a sizeable data through its product range – DuitNow (also known as Malaysia’s National QR Code), JomPAY and FPX. MSMEs that are not registered with the Companies Commission of Malaysia but may have registration under local councils could have transaction data in any of these data points.
“Collaborating with MDEC and PayNet, CGC Digital has identified potential fintech companies to embark on proof-of-concept initiatives aimed at validating the effectiveness and viability of Alternative Credit Scoring model. This initiative is aimed to empower MSMEs and bridge the financing gap by democratising access to credit guarantee and financial services in advancing financial inclusion,” said CGC Digital CEO Yushida Husin.
MDEC CEO Mahadhir Aziz said that the collaboration is a testament to their commitment to drive innovation in the financial sector and address the MSME financing gap.
“The Malaysia Digital (MD) national strategic initiative and suite of dynamic PeMangkinMD programmes aim to transform our nation’s digital capabilities, foster the growth of tech companies, and boost the digital economy. We are optimistic to facilitate more partnerships between financial institutions, fintech companies and relevant ecosystem partners with a common goal of revolutionising credit assessment methods which will be a game changer for the financial sector,” he added.
The MoU is envisaged to spark ideas to promote and scale more pilots using Alternative Credit Scoring data points among industry players. According to PayNet chief commercial officer Gary Yeoh, validation of Alternative Credit Scoring’ effectiveness as a complementary tool in the credit assessment of businesses across all sizes will catalyse new frontiers on how credit is assessed and this could be a tipping point in a much-needed financing ecosystem where traditional banks are limited by conventional credit scoring tools.
Using innovative solutions – such as artificial intelligence and machine learning – for insights and data from non-traditional sources such as transaction data, utility and assessment payments, rental payments, mobile payments and more can potentially be used to assess MSMEs’ creditworthiness based on historical payment records.
The parties are cognisant of the opportunities that can be crystalised through Alternative Credit Scoring. The ability to co-create a data-sharing environment that supports a thriving community of fintech companies, accessibility of financial products across all businesses and people and customisation of financial products and services will revolutionise Malaysia’s future financial landscape.