Home Credit, a consumer finance provider with operations in Asia and Eastern Europe, is broadening its offering from loans to insurance. It has just announced a deal with MSIG, the Asian general-insurance brand of Japan’s MS&AD Insurance Group, to work together in three Southeast Asian markets.
On Home Credit’s side, the deal was announced by Frédéric Tardy, Hong Kong-based chief customer and strategy officer. Tardy joined the company a year ago after a career in insurance, most recently as chief marketing officer at Zurich, as well as group head of sales and marketing at AXA.
The partnership is meant to include collaboration with MSIG on both distribution and product development, and will begin in Indonesia, the Philippines and Vietnam.
Partnership goals
For MSIG, Home Credit brings customers from emerging middle classes, most of whom have not yet experienced insurance. The firm will begin by offering home insurance. Its chief operating officer for Asia, Clemens Philippi, cited climate change as creating new risks in the forms of floods and storms.
For Home Credit, the relationship allows it a broader footprint of financial services – and a means to differentiate itself as it comes under pressure from a new crop of buy-now, pay-later fintech competitors.
Home Credit sits between an incumbent financial institution and a fintech. It launched in Czech Republic in 1997 and built out in Russia and Kazakhstan before moving into Asian markets, including China, India, Indonesia, Philippines, and Vietnam.
“We’re the global leader in consumer finance, with 140 million customers,” Tardy told DigFin. “The challenge is that buy-now, pay-later is trendy. Our market used to be boring to fintechs, but now it’s hot.”
BNPL challenge
Tardy’s mandate when he was hired last year was to ensure Home Credit retained its advantages both online and offline. Home Credit also provides BNPL options, including both in-store and – mainly in Asia – via its own mobile app.
These customers are new to credit. In Asia they are unlikely to have ever owned a credit card. Local banks ignore them, especially if they’re young. Home Credit accesses them through partners such as e-commerce players like Tokopedia in Indonesia, as well as physical stores. Often the first item people buy using Home Credit loans is the smart phone itself.
The company prides itself on the collections side of the business, which its executives say explains why it is profitable when many BNPL fintechs are not. But if collections are seen in the context of customer service, then building loyalty is a related aspect.
Tardy says the company has made an effort to win customer loyalty by offering payment holidays during COVID outbreaks.
From credit to insurance
The pandemic has highlighted the need for health-related needs. “There is a huge protection gap for the new middle classes,” Tardy said.
Although it’s a leap for Home Credit to sell health insurance to a consumer, it plans to create a link by first insuring consumer purchases – mobile phones, refrigerators, televisions. When customers are applying for credit for what can be large purchases at their income level, Home Credit salespeople can cross-sell insurance.
The company is also now developing digital apps to support such cross-sales. “It’s hard for traditional insurance companies to target these customers,” Tardy said, noting they aren’t lucrative enough for insurance agents.
