e-Money mobile loan and savings facility from Landbank-Smart welcomed by gov’t agencies

Published August 13, 2014

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Smart e-Money, Inc. (SMI) and Land Bank of the Philippines have joined hands to push inclusive, responsive, and responsible financing services via the LANDBANK Mobile Loan Saver facility, the country’s first fully electronic and paperless salary loan and auto savings program. Smart chief wireless advisor Orlando B. Vea (2nd from right) and LANDBANK president and CEO Gilda E. Pico (center) led in tapping the ceremonial button signaling the official launch of the LMLS to the bank’s clients last August 8. Also in photo are, from left, Jovy Hernandez, FVP and head of PLDT Alpha Enterprise, PLDT; Jocelyn Cabreza, EVP, LANDBANK; and Lito Villanueva, head of Payments Innovation, Digital Ecosystems & Global Engagements, SMI.

Less than a week after its commercial launch, the LANDBANK Mobile Loan Saver (LMLS) facility has already generated over 270 sign-ups from government offices, with a combined employee base of approximately 120,000.

The LMLS is the country’s first paperless and fully electronic salary loan with automatic savings and insurance facility that was launched by state-owned Land Bank of the Philippines (LANDBANK)  and Smart e-Money, Inc. (SMI), the financial services subsidiary of wireless leader Smart Communications, Inc. (Smart).

Government employees can start availing of the service during the first phase of LMLS’ commercial rollout.  This will be expanded to include workers from the private sector during the second phase of the rollout to be launched in September.

The 270 government offices comprised of national government agencies, local government units (LGUs), and government-owned and -controlled corporations (GOCCs).

LANDBANK and SMI are conducting a nationwide caravan to formally introduce the service to government agencies, and their employees.  It kicked off last August 8 at the PICC Plenary Hall for the Manila and Luzon leg coinciding with the 51st foundation anniversary of LANDBANK.  A similar event was likewise held in Cebu for the Visayas last August 12. Last stop would be in Davao for Mindanao this September.

“This socially innovative financial service combines the pervasiveness of the mobile phone with the extensive banking reach of LANDBANK especially in the countryside in pushing for a program for financial inclusion,” said Smart chief wireless advisor and SMI president and CEO Orlando B. Vea during the Manila leg of the LMLS caravan.

“There is nothing more powerful than a collective effort pulled by a common vision and a noble goal.  The LANDBANK Mobile Loan Saver is a product of our thrust to innovate how we do things.  We help you grow,” said LANDBANK president and CEO Gilda Pico in her speech. 

“Borrowing is a double-edged sword.  Done responsibly, it can help bridge for much-needed help such as education, health-care, housing, entrepreneurship endeavors, or investments for the future.  But distress borrowing can push households into situation of persistent financial difficulties,” added Vea.

A study conducted by the Bangko Sentral ng Pilipinas (BSP) showed that only one out of four Filipino households has savings, underlying a vulnerability especially for emergencies when spending is required.

“This is in line with the BSP’s advocacy to support the banking industry’s initiatives to employ the advances in technology as a leverage to offer innovative products and deliver fast and efficient service at affordable prices,” said BSP Deputy Governor Nestor Espenilla, Jr.

This program totally eliminates the preparation and submission of paper documents such as loan application, income and loan approval forms, and post-dated checks, among others.  It saves the borrower transport costs by going to the bank to submit the loan documents and the hassle of taking a leave just to facilitate such application.

The mobile-based application is available 24x7 where the borrower gets the credit decision or approval in a speed of text.  The borrower immediately fulfills the online process by keying-in the passcode sent to the mobile phone.  The loan proceeds could then be credited to the ATM payroll account as fast as next banking day.

Employees could apply for a loan as much as P1 million or eight times his/her gross monthly pay, whichever is lower. Interest rate is one of the lowest in the industry at 0.83 percent per month based on diminishing balance and repayable up to 36 months or three years. Monthly amortization and auto-savings amount are both deducted from borrower’s payroll account every pay period.

The auto-savings component bears savings account interest, which would accumulate and could only be withdrawn at loan maturity, hence, building the habit of savings among borrowers. It also has a built-in insurance in the event of the borrower’s untimely death or incapacitated due to accident, then the entire loan is fully paid and the total accumulated savings with interest will accrue to the immediate family members of the borrower.

“This is an example of a market-based innovation solution that contributes to responsive and responsible financial access among Filipinos, especially those who have limited access to mainstream financial services,” said Lito Villanueva, head of Payments Innovation, Digital Ecosystems & Global Engagements at SMI.

Under the program, qualified state workers aged 18 to 64 with LANDBANK ATM payroll accounts may apply for loans by simply sending a text message through their Talk ‘N Text (TNT), Smart or Sun Cellular mobile phones. This is after their respective human resources heads of government agencies have submitted the list of qualified and eligible employees to avail of the program to LANDBANK.

Under LMLS, government workers may apply by simply sending a text message using their TNT, Smart or Sun SIM: <LOAN> <SPACE> <Employee No.> <SPACE><Assigned Agency Code> to 5363.