Non-performing loans (NPLs) is a persisting problem globally and is the natural consequence of a boom in consumer lending.

Traditionally, banks employed henchmen/used brute force to recover loans from retail consumers. This has oftentimes created friction between lenders and consumers.

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“In Poland, unsecured consumer lending exploded after the collapse of the communist regime in the last decade of the last century. The problem with rapidly growing unsecured NPLs in Ukraine appeared after the financial crisis in 2008,” Tomasz Borowski, a banker with considerable working experience in Europe, told e27.

“In both cases, the issues with growing NPLs triggered foundation for professional credit management services (CMS) companies, which were able to help lenders to improve the quality of their loan portfolios,” he added.

However, these firms couldn’t remove the inefficiency from loan recovery.

Borowski sensed an opportunity here. He decided to club his experience in the risk management and operations domain and new-age technology to develop a software solution to tackle the problem head-on.

“We looked closer in Southeast Asia, and made a couple of business trips and meetings with C-level managers from local and international banks in the region,” he said.

This led to the birth of AsiaCollect, which was recently rebranded as ‘Flow‘.

Started by Borowski and his former colleagues Greg Krasnov and Peter Barcak, SaaS startup Flow automates consumer debt collection for banks and financial services firms.

The Singapore-headquartered startup utilises Artificial Intelligence and Machine Learning to create debtor profiles to help banks and non-banking lenders recover their NPLs through mediums such as automatically-generated SMSes, interactive voice recordings, and predictive dialling systems.

The motivation

The idea of AsiaCollect occurred to Borowski in 2015 while working in Kyiv, the capital city of Ukraine where he moved from his home country Poland in 2006. There he saw a very brutal, inefficient and people-driven debt collection market.

The situation was also same in Asia. So he was determined to utilise his 12-plus years’ experience in risk management and operations and accelerate the transformation of the collection market in Southeast Asia.

In Asia, according to him, debt collection has a negative connotation. The brute-force format of debt purchasing is still in play in many parts of the region.

“At Flow, our focus on ethical treatment of borrowers, emphasis on data insights, AI-driven automation and champion challenger collection strategies gives us a distinct advantage and helps to mitigate many of the challenges facing the industry,” he explained.

“The foundation for our collections services and NPL portfolio purchasing business is our proprietary collections platform. It allows us to minimise human’s impact on collection process execution,” Borowski claims.

How it works

The startup’s collection strategies are based on incorporated rules (logical expressions) to re-distribute all cases in the portfolio among different collection actions.

The predictive autodialler and CRM system enable automatic calling along with complete information about the borrower, his/her debts and history of interactions, promises and payments on the operator’s interface to let him/her instantly be ready for the conversation.

“The dynamic call script makes suggestions for further questions and phrases to the borrower based on previous answers. The system also has dynamic voice-to-text conversion, automatic speech recognition covering 100 per cent of conversations,” he explained.

A US$100-billion market

Borowski expects US$100 billion-plus consumer NPLs to be generated in the next five years in Vietnam, Indonesia and India together. This presents a large untapped opportunity for the startup to be a sizeable player in the region in the medium term.

“In addition to our CMS outsourcing services, NPL purchasing is expected to be a high growth vertical for us. As our operations become more automated and AI-driven, there is an opportunity to package and sell the AI models that we plan to use in-house to increase efficiency and PTP ratios,” he noted.

Funding and expansion

At present, Flow has operations in three markets, namely Vietnam, Indonesia and India. It has partnerships with 40-50 banks, multi-finance companies and selected online lenders in these countries.

While the company’s focus continue to be these three markets, in the short-to-medium term, it will venture into other markets opportunistically.

“In the past, we have received reverse enquiries to set up operations in Thailand, the Philippines and Malaysia. Eventually, as the company grows, we intend to look at selected markets beyond Asia, and this has also been a part of the reason to transition from “AsiaCollect” to Flow,” he informed.

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Flow’s business model consists of 1) commission-based revenue from the services business which is a percentage of the amount recovered for the clients, 2) revenues based on the amount recovered from its purchased NPL portfolios, and 3) revenue from packaging and selling its in-house AI-models.

Last week, Flow raised US$6 million in Series A investment, led by DEG (a subsidiary of Germany’s KfW Group, and Dymon Asia Ventures, SIG Asia, and SCB10X (the VC arm of Thailand’s Siam Commercial Bank).

The fintech company is now back in the market to raise US$10 million in Series B round and has commenced initial talks with a few interested parties, said Borowski.

“Our existing investors have always been supportive of our expansion and growth plans and we are sure they shall support us in our Series B as required,” Borowski concluded.

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Image Credit: Flow

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