CGC Digital, MDEC and PayNet collaborate to bridge MSMEs’ US$19.17bil financing gap via innovative alternative credit scoring

• Partnership signifies collective commitment to address a national-level problem statement
• Revolutionising credit assessment methods which will be game changer for financial sector

CGC Digital Sdn Bhd, Malaysia Digital Economy Corporation (MDEC), and Payments Network Malaysia (PayNet) signed a collaboration agreement aimed at driving financial empowerment and fostering inclusivity among Micro, Small, and Medium Enterprises (MSMEs) in Malaysia through pioneering Alternative Credit Scoring solutions.

This tripartite partnership signifies a collective commitment to address a key national- level problem statement, the US$19.17 billion (RM90 billion) financing gap to MSMEs. The digital tool to power the bridging of this funding gap will be the Alternative Credit Scoring, undertaken by CGC Digital as it explores possible alternative data to facilitate the development of its Alternative Credit Scoring model. This partnership will be led by CGC Digital in providing the digital guarantee developed for CGC, MDEC in connecting the fintech players and championing policies/frameworks, and PayNet in the utilisation of its payments data.

PayNet as the national payments network has over the years aggregated sizeable data through its product range – DuitNow (also known as Malaysia’s National QR Code), JomPAY and FPX. MSMEs who are not registered with CCM (Companies Commission of Malaysia) but may have registration under local councils in the country could have transaction data in any of these  platforms.

“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 Yushida Husin, CEO of CGC Digital.

Ts. Mahadhir Aziz, CEO of MDEC said, “This collaboration is a testament to our commitment to drive innovation in the financial sector and address the MSMEs financing gap. The Malaysia Digital (MD) national strategic initiative and suite of 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.”

The MOU is envisaged to spark ideas to promote and scale more pilots using Alternative Credit Scoring data points among industry players. Gary Yeoh, Chief Commercial Officer of PayNet adds, “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. 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 e.g., artificial intelligence, machine learning, etc, 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.

Collectively, all parties are cognisant of the opportunities that can be crystalised through Alternative Credit Scoring to revolutionise Malaysia’s future financial landscape.

This includes 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;
• Customisation of financial products and services