Smart and LANDBANK mobile loan service hits over P1B in 6 months

Published March 6, 2015


Loans disbursed via the Mobile Loan Saver (MLS) facility of the Land Bank of the Philippines (LANDBANK) powered by Smart e-Money, Inc. (SMI) have reached P1 billion barely six months after it was launched to government employees.

The country’s fully paperless and electronic salary loan that was rolled out by LANDBANK and SMI in September last year provided government employees with an alternative source of financing that they can apply for simply by sending a text message using their mobile phones.

“The loan take-up has exceeded our initial projections.  Low interest costs, quick loan processing turnaround time, convenience, and security have made MLS uniquely positioned to address the requirements of the target market—government employees, most of whom are grappling with high interest rates slapped by loan sharks,” said  Gilda E. Pico, LANDBANK president and CEO.

It offers a low interest rate of 0.83 percent a month, or about 10 percent effective interest rate annually.

Over 7,000 loan applications have already been approved, with average loan size per borrower of P144,000.  In terms of geographical location, Metro Manila residents accounted for more than half of the borrowers, followed by Luzon at 20 percent.  Visayas, and Mindanao accounted for 11 percent each.

“With LANDBANK’s nationwide branch network and the Philippines’ leading wireless network operator behind this mobile loan facility, we are optimistic that more government employees all over the country will be able to avail of this service to address their immediate financial requirements,” said Lito M. Villanueva, vice president and head of financial innovation and alliances at SMI, the digital payments subsidiary of Smart Communications, Inc. (Smart).

“We are bullish on the prospects of MLS not only as a viable financing option for our workers in government, but also as an effective tool for digitizing financial transactions across segments in support of the government’s thrust in promoting electronic channels,” said Orlando B. Vea, president and CEO of SMI.

SMI and LANDBANK plan to eventually expand this service offering to include employees of private companies so they too can avail of this fully electronic salary loan.

“Market-based solutions and innovations can only be successful if they address needs of the target market, and MLS has a unique value proposition not offered by interim financing products in the market,” said Jocelyn Cabreza, LANDBANK executive vice president and branch banking sector head.

MLS provides borrowers the quickest credit decision in a speed of a text and fastest crediting of the loan proceeds to their ATM payroll accounts as fast as the next banking day.  This eliminates the average two-week loan processing turnaround time.

Being a fully electronic service, the borrower saves time and cost for submitting and producing numerous income and employment documents to process loan application.  A government employee need not take a leave of absence to submit documents or get the loan check, if approved.

"Since it is fully electronic, the service has no hidden charges as it saves on administrative costs which are then passed on to the borrowers in a form of reduced interest rate and service fee,” said Benjie Fernandez, SMI chief operating officer.

“The growing traction only shows the familiarity of the consumers in using mobile phones.  There is no learning curve in educating the target market on how the process goes utilizing their existing mobile devices.  It also promotes greater access to the Internet as it is part of the complete user experience,” added Villanueva.

The loan system runs under a secure environment as the infrastructure framework of SMI, which strictly follows standards and certification of the Payment Card Industry Data Security Standard (PCI-DSS).