Singapore’s TSLC joins Aafaq to disrupt UAE consumer credit market

Singapore’s Social Loan Company and Dubai-based Aafaq Islamic Finance announced a partnership to deliver mobile-first loan platform that could democratise and disrupt the US$90.91 billion (Dh333.88 billion) consumer credit market in the UAE.

The partnership with The Social Loan Company (TSLC), a Singapore-based AI/ML-powered cutting-edge big data-driven credit enablement platform company, will help Aafaq Islamic Finance to set up a trend-setting non-bank, mobile-first loan platform to deliver financial access to the underserved young digital natives in the MENA region.

TSLC has set up its regional headquarters in the UAE to bring in its AI-driven full-stack neo banking platform for the underserved digital natives across chosen markets in the region.

TSLC and Aafaq will enable personal loans, pay later and virtual credit lines all in one digital wallet. Bundled-in, splitable and consumable within minutes of origination designed for middle-income borrowers who need help with essential day-to-day purchase decisions, paying down and consolidating high interest debt, or to meet unexpected expenses. The partnership will be committed to democratising access to banking tools to secure affordable credit, borrow and spend responsibly, build wealth and save smartly, all within a hyper-inclusive platform.

TSLC said, it will start lending unsecured loans to the UAE’s unbanked population.

“The UAE has a strong infrastructure where we feel we could support the consumers who needs credit the most, to the tune of US$100 to US$1,500 range – for meeting their certain requirements,” Deepak Saluja, Co-Founder, Group CEO & Board Member, TSLC, told the Arabian Post on the sidelines of a press conference organized to announce the deal with Aafaq Islamic Finance.

“Our research shows that about 50 percent of the UAE’s 9.9 million people are unbanked and 60 percent of those remain underserved, making our target more than three million people in the UAE, who could benefit from instant loan disbursement to carry on with their daily lives.”

Before the COVID-19 pandemic in 2020, the total population rose to 9.9 million – of which only 30.7 percent are women. The median age in the UAE is 32.6 years. As the population of the UAE continues to grow, consumer credit demand is also expected to grow. Nearly half of the UAE’s 9.9 million people are unbanked or underserved – with less or no access to credits, living on the meagre salary paid to them through the Wage Protection System (WPS).

“Foreigners from South Asia, and the Middle East mostly populate the UAE, with expatriates making up 88.5 percent of the population. However, this group also makes up the majority of the population living below the poverty line, which is defined by those who earn less than US$20 a day. Emiratis have the highest standards of living in the country, while immigrants have the lowest,” said a recent report by Santander Trade.

“According to a survey carried out in 2017, nearly half of the residents of the UAE were in debt, and 12.8 percent of people were actively looking for a loan. The most common large purchase that people in the UAE are borrowing for is the acquisition of a house, followed by starting a business, going on holiday, and having a wedding.”

While Islamic banks do not compound the profit rates, conventional banks in the UAE do charge compounded interest. For many people in the UAE, cash is dying. Consumers are increasingly living in a cashless world and abandoning bills and coins in favour of debit and credit cards. In 2018, almost half of all purchases made in the country were paid using cards, which is more than all the other payment types combined.

Deepak Saluja said his company’s partnership with Aafaq Islamic Finance is exclusive.

“We will not tie-up with any other financial institutions in the region,” he said. “Moving forward, however, we would like to get into the Micro, Small and Medium Enterprises (MSMEs) market where we see a great opportunity for us.”

Although banks had stopped lending to the MSME sector in 2016 to a large extent, it has started to grow in recent years. Bank lending to MSMEs increased by Dh3.3 billion to reach Dh92.8 billion in 2020, 3.7 percent higher than the level at the end of 2019.

Rashed Mahboob Al Qubaisi, CEO of Aafaq Islamic Finance said: “We are pleased that Aafaq was selected by TSLC as a strategic partner in the MENA region. This partnership allows Aafaq to connect more deeply with its customers by providing differentiated Sharia-compliant financial transactions in an environment that is end-to-end digital, safe and secure.”

Al Qubaisi pointed out that “what distinguishes this new partnership between Aafaq and TSLC is the new possibility of extending our client base to include the young and underserved digital natives in this region.”

“TSLC is looking to usher in a new era of Artificial Intelligence-based financial services in the MENA region. There is no doubt that our current and future customers will reap rich rewards from the formidable combination of our legacy infrastructure with their proven expertise and track record of success in financial technology.” added Al Qubaisi.

TSLC recently set up Digital Collective Technologies Ltd., its wholly-owned subsidiary in Abu Dhabi Global Market (ADGM) for its centralized world-class tech and product leadership teams to operate from its regional headquarters at One Central, Dubai, UAE.

TSLC is currently fully functional in India as an end-to-end tech enabled, integrated, fully-automated diversified millennial consumer finance company under the brand name, CASHe – India’s leading consumer lending platform supported with proprietary AI-driven underwriting, and straddling the entire value chain of digital lending from in-app loans to embedded finance and BNPL. TSLC is on an ambitious global expansion drive, looking at key markets in West, South and Southeast Asia, as well as Latin America and Sub Saharan Africa.

Deepak Saluja said: “To launch in the Middle East, we needed a super-progressive institution with an impeccable track record, connected with us on a common mission to bring the underserved, everyday consumers into mainstream banking. Our partnership with Aafaq is a testimony to our global advocation of a JV-driven win-win model of co-operation between incumbents and challengers.

“Our hyper-inclusive proprietary platform, nuanced for this region, is designed to serve the moderate income, near-prime consumers. This transformational partnership is expected to bring about a paradigm shift in the fundamentals of credit assessment and delivery, anchored on the joint objective of building a more inclusive financial system.

“Together with Aafaq, we will redefine the financial landscape, transform the world of online lending in the Middle East and fundamentally change the way everyday people approach their relationship with money and banking in this region. Our ground-breaking ML-powered alternate data-driven credit-scoring engine will enable faster and better credit decisions, lower the barriers of borrowing and deliver access to honest, affordable and transparent credit.”

The UAE’s regulatory framework is designed to foster innovation within this region. Given that MENA region has amongst the highest smartphone penetration and Fintech adoption rates in the world, going end-to-end digital has moved from being a side-show to the front and centre as a ‘must-have’ and a key strategic imperative to help achieve the digital transformation in the most holistic way possible, he said.