THE pandemic has certainly accelerated the acceptance and adoption of digital financing among businesses and individuals in Malaysia.

       As more companies sought out new sources of capital during the economic downturn last year, peer-to-peer (P2P) lending platforms saw stronger performances and disbursed record amounts of funds to micro, small and medium enterprises (MSME).

       Given the circumstances, Fundaztic chief executive officer Calvin Foo says its platform performed rather commendably.

       “As compared to the previous years, I would say we did a fantastic job given the situation we had to overcome with the ongoing pandemic and restrictions. None of our achievements would have materialised without the Fundaztic team’s efforts.

       “2021 was our strongest performing year since we started in 2017 and Fundaztic has managed to disburse over RM140mil to 2,100 underserved MSMEs by its fourth year,” he says.

       He notes that with the acceleration of digital transformation efforts among businesses in Malaysia, P2P lending should continue to gain traction as an alternative financing option for MSMEs.

       Additionally, platforms now offer short-term financing options and allow for easier access through online applications.

       This will further enable MSMEs to tap resources to scale up their businesses and increase their income with as little hassle as possible.

       In an earlier statement, P2P site Funding Societies Malaysia also noted that its financing deals grew by 100% in 2021 compared to the previous year, while the default rate was maintained at around 3%.

       The platform says the growth comes on the back of an adjusted business model and risk underwriting after picking up some lessons from the challenges and uncertainties it faced over the past two years.

       Funding Societies also recently crossed the RM1bil disbursement mark, with business financing approved through more than 17,000 financing deals to support creditworthy underserved MSME across the nation.

       “The pandemic has paved a new era of digital inclusion. This simultaneously allows us to scale further in reaching out to more of these creditworthy MSMEs, in line with their increased awareness on digital financing platforms.

       “This RM1bil disbursement milestone is a reflection of the thousands of underserved creditworthy SMEs we have supported over the years, not just in Malaysia, but also across South-East Asia,” says co-founder and chief executive officer Wong Kah Meng.

       Foo says P2P lending continues to appeal to a wide variety of businesses.

       Based on the data collected from Fundatic’s platform, the services sector currently makes up the bulk of issuers with 28% of all notes issued, followed by retail (19%), wholesale (15%) and food and beverage (11%) industries.

       While still relatively small, Foo adds that the percentage of notes issued to e-commerce players (4%) has quadrupled in the last 12 months.

       “This conforms with recent economic trends which see more Malaysians making online purchases as a result of the prolonged closures of physical storefronts.”

       Foo remains bullish about disbursement this year.

       Fundaztic aims to disburse over RM100mil to 1,800 underserved MSMEs through more innovative products.

       As it enters its fifth year of operation, Foo says the platform will look into all the feedback and data it has gathered up to this point to determine if its initial start-up goals have been met. This will also help it identify areas for improvement.

       Five years, after all, is a crucial milestone.

       “While we remain upbeat about our P2P market share and growing community of investors, it is our duty to review the platform, its processes and its features to keep it optimised and up-to-date.

       “One of the plans of Fundaztic for the first quarter of 2022 is to enhance the overall onboarding and application processes of MSMEs in order for them to have an even quicker and seamless experience on the platform,” he says.

       He adds that the investment from Paramount Corp Bhd will help it improve its user experience and stay ahead of the curve as the financial sector becomes increasingly digital in the years to come.

       Last August, Paramount completed the acquisition of a 30% stake in Omegaxis Sdn Bhd, the holding company of Peoplender Sdn Bhd which operates Fundaztic, for RM13.7mil.

       But Foo says it hopes to also work with other institutional organisations to provide more attractive options to businesses of all industries and backgrounds, while cultivating an ecosystem that grants investors a multitude of ways to diversify their investments and build a robust portfolio.

       Notably, given the volatile market, investors are also seeking out alternative investment options, which could see more funds going into P2P.

       Foo says Fundaztic will leverage every advantage it can get to raise the bar for the platform and the P2P industry this year and beyond.

       However, greater awareness on digital financing solutions is crucial for P2P to scale to another level of disbursement. On the one hand, MSMEs need to be better acquainted with non-bank lending, and on the other, investors need to be open to more alternative investment options.

       “P2P financing literacy is key to mainstream acceptance and adoption of the digital solutions offered by Fundaztic. Although this has risen steadily in recent years, we believe there are still local businesses and individuals who remain unaware of the flexibility P2P financing offers compared to conventional financing institutions.

       “Therefore, we will continue to engage with our investors and the general public via online talks, forums and seminars to share the best practices in P2P financing and advice on how to make the most out of the platform for varying financial goals,” says Foo.

       Funding Societies, meanwhile, is likewise optimistic about its growth trajectory this year, having established over 60% market share in the space.

       “Based on our forecast, we look to disburse more than RM500mil in financing this year, with the strong support from all our stakeholders,” says Wong.

       “Our achievement (last year) was especially meaningful considering the past two years have been anything but normal.

       “However, there is still a lot to be done to improve access to financing for MSMEs. Awareness and collaborations are key to our growth and to this end, we look forward to more fruitful partnerships with the government as well as industry partners to widen our reach,” he adds.

       By providing equal access to financing for MSMEs, Funding Societies aims to boost the economy post-pandemic by making available various financing products, schemes and initiatives to the segment.

       Regionally, the platform has reached RM8.5bil in total financing disbursement as of January.

       In its inaugural regional impact study released late last year which surveyed the platform’s impact in the countries it operates in – Singapore, Malaysia and Indonesia – it found that 72% of the respondents said their revenues would have decreased if not for the platform’s business financing.

       Meanwhile, 84% of the surveyed businesses had used the financing as working capital to pay for overheads, inventory and business equipment, which were all crucial in their efforts to sustain operations.

       Funding Societies also fared well in its investors segment. Although returns on investments have taken a hit across most asset-class, investments in digital financing platforms continue to hold ground.

       The platform has on-boarded more than 50,000 investors to-date. It has also introduced several new investment products within the last year to cater for investors actively seeking to diversify their portfolio.