KUALA LUMPUR: Aeon Credit Service (M) Bhd’s integration of artificial intelligence (AI) in FY23 as part of its initiatives to enhance financial performance in the challenging post-pandemic market environment is projected to result in a reduction of high-risk customers by 5% to 10%.
CFO Lee Siew Tee said it aims to reduce its high-risk borrowers group to around 20% from a total of 30% of borrowers at the moment with the use of the AI model.
“The group has recently observed the trend of younger customers, specifically those who are below 25 with a lower disposable income (RM2,500 and below) are facing challenges when it comes to timely debt repayment.
“(Therefore) We have been focusing on our portfolio management to manage the risks where several initiatives had been implemented in FY23 to improve our assets quality. We have collaborated with Japan’s Global Al Innovations Laboratory Co Ltd which offers Al-based credit scoring service.
“The AI will be used for us to optimise and enhance the application process of the eligible applicants to improve our approval ratio as well as adopting a risk based collection approach which is focusing on high risk customers to improve our productivity and collection performance,” Lee told a press conference after its AGM today.
Lee said that the AI model primarily relies on Opex, with only RM2-3 million of capex investment to the Japanese company that provides consultancy for the analytical tools required to develop the model.
Chairman Ng Eng Kiat said Aeon Credit will re-skill affected employees due to the use of the AI and redeploy them in other areas where these employees can utilise their skills.
In addition, Ng commented that the recent interest rate hikes and inflationary trends have a bearing on people’s disposable income which may have an impact on its business.
“Besides, there are other platformers coming on board. And now we’ve got the four (new) digital banks to contend with. And not only that, there are also the non-bank credit providers. So it is not an easy business, but we hope to overcome the challenges,” Ng added.
Aeon Credit expects mid to high single-digit growth this year barring unforeseen circumstances.
“Motorcycle is the highest, followed by personal financing and thirdly is used car financing,” Lee said on its major growth contributor.
Last week, Aeon Credit made its second issuance of sukuk wakalah under the Islamic commercial papers programme of RM80 million in nominal value and a six-month tenure from the date of issuance.
“The 80 million sukuk wakalah is meant to be used to finance our working capital for the disbursement to our Islamic products. Every month, if we are growing our receivables, we basically requires around RM80-100 million of new working capital for us to expand further,” Lee told reporters.
