Digerati50: Kristine Ng gives ‘Power to People’ through P2P lending platform

• Mission is to close the financing gap of micro, small and startups
• Principal Protect scheme reassures investors while automation allows quick restructuring

Digital News Asia (DNA) continues its series that profiles 50 influencers who are helping shape Malaysia’s Digital Economy, from Digerati50 2020-2021 (Vol 4), a special biennial print publication released in July 2020. The digital copy can be downloaded from the sidebar link.

The following article is an expanded version of the print edition.

Kristine Ng’s passion and conviction in peer-to-peer lending comes through in her exuberance when talking about the business she cofounded in 2016, Peoplender Sdn Bhd, which owns and operates P2P platform Fundaztic. Before venturing into Fundaztic, Kristine had spent five years working at Credit Guarantee Corporation Malaysia until the launch of the wholesale guarantee scheme for small medium businesses.

Just as she was mulling her next career goal, she met Gary Tan. “He talked about retiring and starting this crowdfunding venture, and he was surprised to find that I knew about the scene.”

Having helped her husband prepare a crowdfunding proposal before, Kristine had some knowledge and lots of interest in the space. She decided to hop on board with Gary to launch Fundaztic and has counted milestones with the company ever since. For Fundaztic, its mission is to close the gap to financing by “targeting 80% of the 98.5% in the SME ecosystem – the micro, small and startups,” she explains.

“Incidentally, these are the ones that are off the radar of the banks and are facing difficulties in terms of access to financing – not because they are not viable businesses, but certain policies of banks are not friendly to these businesses,” she explains, adding that most banks would not lend to businesses in operation for less than two years.

The business sectors that turn to P2P lending as an alternative, Kristine shares, range from manufacturing and construction to wholesale and retail businesses. The bulk is made up of wholesale and retail businesses which make up 65% - 75% of the market.

“We don’t discriminate against any industry. For example, the food and beverage sector find it quite impossible to get funding from banks. Because they are mostly cash businesses, the perception is they need not borrow if they are doing well. And if they are not doing well, banks question their ability to pay back.”

Seeing an opportunity here, Kristine explains: “We needed to find a way to underwrite these businesses. We evaluate them by looking at the people behind the business – some could have very good credit behaviour, reputational risk or could even be high net worth individuals. There are ways to evaluate the business viability.”

With Fundaztic itself being a relatively new company, it can empathise with new businesses in the market. The acronym P2P stands for peer-to-peer but for Fundaztic it represents something bigger. “Power to the people. We give businesses a chance by putting them on our platform and letting the crowd decide.”

As for business impact during this era of Covid-19, Kristine noticed a dip in the number of notes hosted on Fundaztic but there has not yet been a period of inactivity. “The drop is understandable because we need to do enhanced due diligence,” she said, adding that the temporary closing of 80% of businesses hampers site visits. [Ed: Note that DNA spoke to Kristine in May 2020.]

During this time in particular, its Principal Protect scheme is particularly reassuring for investors which kicks in for every 100 notes in a portfolio with a US$7,300 (RM30,000) guarantee for those who invested US$24,250 (RM100,000) and above. Without this feature, it is likely that investors would resort to a “wait and see” approach which Kristine believes will negatively impact the industry.

Further encouraging investors is the fact that the default rate is between 3% to 4%. “This is lower than the minimal default of between 5% and 8% that we had projected,” she says, referring to the live default statistic on Fundaztic’s website.

The platform’s tech capabilities also came in handy during the Covid-19 period of uncertainty. Other than its quick processing of applications, Kristine believes Fundaztic’s high degree of automation has been incredibly beneficial in making changes almost overnight. “We were bracing ourselves for delay in repayments and higher defaults. One way to address that is to quickly reschedule and restructure existing customers payments.”

While overall investor sentiment and activity has taken a dip, Fundaztic’s role bridging SMEs to available funds has certainly made the ecosystem more vibrant since its inception. Being on the verge of some exciting future plans, such as licensed entry into Singapore and introducing a P2P secondary market, Kristine is confident the platform holds promise in helping revitalise the digital economy post-outbreak.

[Ed: Kristine left Fundaztic in the second half of 2020 to rejoin the corporate world.]

Digerati50 2020/2021 is proudly sponsored by Maxis - Powering Malaysia's 5G era.