BSP revolutionises lending in PNG

BANK South Pacific is revolutionising lending with the introduction of an automated lending platform, which will make getting loans easier and faster for borrowers.
BSP chief executive Ian Clyne said this was one of the most important initiatives the bank was taking this year.
“In our view, the (lending) process is very slow,” he said.
“It is an area where customers become very unhappy because it takes a long time to get to a ‘yes’ or a ‘no’.
“We are building an automated lending platform, which will be a scouring model for both retail and SME (small-to-medium enterprises).
“What you mean by scouring model is that, based on the required information, the model automatically rates the information and if it meets certain criteria, it will approve.
“This means that if the customer comes in with the correct information, then the customer can come in, apply for a loan.
“The system will say ‘yes’ or ‘no’ very quickly.
“The system copies an automated document module, which will print the loan documents immediately.
“The person can sign and it’s linked to automatic funding.
“This will revolutionise how retail banking is done in PNG.”
Clyne said BSP’s hope was that over the next five to 10, it could take current retail lending of K500 million a year to K1 billion or more.
“If we can take that up to K600 million or K1 billion, which includes SME financing, the economic impact to PNG will be massive,” he said.
On loan recovery, Clyne said default rate in PNG, referring to people who don’t repay loans, was about 15% – very high by world standards.
“We do go after these people who borrow money and don’t repay and we recover about half of the money over five years,” he said.
“The cost of recovery is about 10% of the money.”