At a time when companies are pouring millions to sell their financial products online, from insurance policies to credit cards, Vietnam-based fintech startup MFast is using an old trick instead: agent networks.

Think customer representatives of the ‘90s and early 2000s who go door to door selling anything from cookies to encyclopedias. In the case of MFast, its 350,000 agents in Vietnam have helped disburse US$300 million worth of loans and sell US$3 million worth of insurance policies on behalf of its partner banks and financial institutions.

Now, the company is raising up to US$15 million for its series B round, as it hopes to replicate its success in the Philippines, the second-most unbanked country in Southeast Asia.

In Vietnam, about 69% of its population is unbanked. That figure only slightly improves to 66% in the Philippines, so MFast CEO and co-founder Long Phan Thanh is “pretty optimistic” about the company’s growth potential in the latter market.

MFast was founded by twin brothers Vinh Phan Thanh (left) and Long Phan Thanh. / Photo credit: MFast

“We see the same challenges that we helped solve in Vietnam are also present in the Philippines,” Long tells Tech in Asia.

MFast CFO Minh Quan Dang, for instance, noticed that in both countries, financial institutions mostly compete in urban areas. “So those in rural areas tend to turn to informal forms of credit,” Dang says.

A 2019 survey by the Philippines’ central bank revealed that half of Filipinos source their loans from informal lenders such as friends and family. About a tenth tap informal lenders such as those that offer “5-6” schemes.

See also: Vietnam, Philippines attract VCs deterred by pricey Indonesian market

The company is hopeful that one of its most popular product offerings – personal loans regulated by the central bank – would be attractive to Filipinos. The products, after all, are offered by agents, who could be a friend or family member.

Aims for net profitability by 2025

Dang says MFast’s first quarter of operations in the Philippines was promising, as the local office earned revenue with just 30 agents. The company has initially partnered with small financial institutions such as SB Finance, an affiliate of a listed bank in the country, and Global Dominion Financing, a local lending firm, to offer secured personal loans in the Philippines.

The startup believes these milestones show that the business model may work outside of Vietnam. But its executives are aware that MFast’s operations in its home country will remain its main driver for net profitability, which it aims to achieve by 2025.

In Vietnam, the company started offering its own brand of consumer loans. “Distributing our own products certainly requires more work, but has significantly helped MFast increase our take rates and margins,” Dang adds.

The startup’s partner clients in Vietnam include BIDV, the country’s largest bank in terms of assets, and MoMo, one of the most popular e-wallets in the market.

It also opened point-of-sale kiosks in more rural areas of the country late last year. These are typically positioned beside neighborhood stores to help agents sell consumer loans for big-ticket household appliances such as air conditioning units and refrigerators.

The company delivers these products on behalf of consumer brands such as Samsung, Daikin, and Sharp without keeping inventories. So far, this new product line seems to be working, says Dang, as the company experienced a surge in loans for air conditioning units in Vietnam last summer.

MFast typically earns between 20% to 25% worth of commission across its product mix. These commissions are shared between the company and the agent, where the latter gets 70% of the value, shares Dang.

While that commission may sound substantial, Dang says the leads generated by the company’s agents are what set MFast different from other financial marketplaces. He explains that these leads have a 20% conversion rate, as agents “offer products to people whom they personally know would need them.”

In 2023, MFast recorded US$4.2 million in audited revenue, thanks to this business model. The company believes that its revenue may more than double this year to at least US$10 million, driven by its Vietnam business, with a small contribution from its Philippine operations, which began in January.

The startup hopes that a Philippine investor will participate in its series B funding round, which it targets to close by early next year, to help with its “strategic growth” in the country.

‘Anyone can be an agent’

Founded in 2017, MFast found success as it allowed “anyone” to be a financial agent. As Dang says, the platform is open to “anyone from any background.”

An individual only needs to submit a copy of their official ID, a bank account, and a mobile number registered under their name – which is mandated under Vietnam and Philippine laws – on MFast’s mobile app.

Once an applicant is approved, they may already start earning based on the number of referrals that they submit to the platform that turn into actual sales.

Through the app, agents submit referrals and customer applications for MFast’s financial services, which include bank account opening, credit card applications, unsecured personal loans, and consumer loans. The app also serves as a customer relationship management platform for each agent, where they are able to track when a previous buyer of an auto insurance may need renewal.

See also: Facial scan to buy banh mi? That’s not too far off in Vietnam

Agents who wish to do more than just referrals, however, are asked to take an exam. Dang says it’s the platform’s quality assurance check to ensure an agent knows to whom a certain product should be offered and the terms and conditions that come with it.

The process has mostly kept fraud at bay for MFast in Vietnam. But Dang acknowledges the risk of fraud in the Philippines “may be higher.”

For instance, Dang noticed that financial institutions in the Philippines seek collateral for loan applications, like the registration documents of a borrower’s vehicle. It’s contrary to the typical practice in Vietnam, where its clients mostly just require a copy of a borrower’s payslip. Sales turnover is then much longer in the Philippines as loan processing takes more time.

In terms of processing customer applications, the company also deals with more potential risks of fraud.

While the Philippines already has a national ID, not all individuals who have applied for it have received official physical ID cards. Other IDs that are commonly accepted in the Philippines for job applications have been subject to potential forgeries.

The SIM Registration Act, which mandates Filipinos to register their names to their mobile numbers, has also only been in effect since last year. The law was seen to help combat online scams, yet identity theft remains a prevalent problem in the country, as cases have risen in the last two years.

Because of this, Dang says that MFast is focused on “professionalizing” its backend operations in the Philippines for the rest of the year, which includes finishing the registration of its business in all relevant regulatory agencies, to help protect its operations from fraud.

An unsolicited offer from MoneyHero Group to acquire rival MoneySmart in August drew eyeballs and a barrage of criticism.

But this was just the tip of the iceberg: Those familiar with MoneyHero say the undercurrents of this move began roughly a year ago.

In October 2023, the financial comparison site went public on the Nasdaq via a merger with BridgeTown Holdings – the special purpose acquisition company (SPAC) backed by PayPal founder Peter Thiel and Hong Kong billionaire Richard Li.

Tech in Asia’s interviews with half a dozen ex-MoneyHero employees reveal some of the company’s assertive tactics to beat its competition in its efforts to hit a profitability goal by the end of 2024.

It sought exclusive contracts with commercial partners – though with limited success – and tried to undercut MoneySmart, a key competitor in Singapore and Hong Kong. MoneyHero also attempted to poach MoneySmart’s employees, its rival claims.

They also lay bare a firm whose board appears to have overstepped its conventional responsibilities at times. 

Several senior leaders, including those who led the firm to list last year, have departed since the start of 2024. 

See also: MoneyHero’s $8m gambit: bold move or blunder?

So far, the company’s share price does not reflect these efforts. Since opening at US$5.39 on its first day of trading last October, MoneyHero’s shares are down by around 78%.

A board member’s outsized role

MoneyHero’s SPAC listing was meant to “accelerate growth” and tap into the “fast-growing” market of distributing financial products in Southeast Asia, Prashant Aggarwal, the company’s then CEO, said in 2023.

But the deal brought about a slew of other changes as well.

These included modifications to the firm’s board of directors. It also shifted the concentration of leadership and voting power into fewer hands.

Pacific Century Group (PCG), a significant shareholder at MoneyHero prior to its listing, became the majority shareholder after the firm went public on the Nasdaq.

A former employee says that MoneyHero closed in on breaking even in the lead-up to its listing by being focused on itself, innovating, and driving sustainable growth. However, the person felt that the company’s strategy took a turn after the listing.

That change was felt externally, too.

MoneyHero and MoneySmart both operated with “generally healthy competitive dynamics” for many years before MoneyHero listed and changed its management and ownership structure, MoneySmart founder and CEO Vinod Nair tells Tech in Asia.

Then, in the past year, MoneyHero began engaging in “very aggressive competitive tactics” toward MoneySmart, the CEO says.

One source recalls “significant changes in leadership style” at the firm after its listing, adding that a particular board member held outsized power and influence among the management team as well as in day-to-day decision-making.

Following then CEO Sam Allen’s departure from the firm, Kenneth Chan, MoneyHero’s director and a representative of PCG, filled in to co-lead MoneyHero as its interim CEO. Chan led the firm alongside Derek Fong, another representative of PCG, for several months in late 2022.

But even after a new CEO was appointed, and when he was no longer interim CEO, Chan, who at the time was board chair, continued to engage directly with employees throughout the organization. This included even those outside the core management team, says a former employee.

“That can create a lot of confusion [for staff] about whose order they should be following, and also it’s difficult for someone to not do what they’re told from the board,” the person adds.

Another former employee recalls that strategic objectives would sometimes change suddenly over the weekend after management meetings with the MoneyHero board were held. Some initiatives, such as the company’s membership program, were deprioritized without any explanation, they say.

These decisions within the firm came “more as a directive order” with little room for discussion, the person shares.

While that level of board involvement in a company’s operations isn’t unheard of, it’s “less common” in a public company, another ex-staff member notes.

MoneyHero CEO Rohith Murthy, in email responses to Tech in Asia, declined to comment on “unfounded claims or rumors” that Chan or any board member held an outsized role in the running of the firm.

He adds that MoneyHero has a “strong” corporate governance culture, where its board of directors provides “strategic oversight and guidance” to the management team, and ensures accountability and alignment with shareholder interests.

The CEO adds that while board members bring along with them “invaluable experience and insights,” day-to-day operations are led by the executive management team, who “make decisions independently.”

“Big sea of change”

In early 2024, several senior-level executives left MoneyHero in quick succession. The firm announced the resignation of Shaun Kraft, its COO and CFO, in February, while CEO Aggarwal resigned the same month. The firm’s group heads of strategy, commercial, strategic finance, and marketing have also left the firm since the start of the year.

MoneyHero’s group head of insurance has also recently resigned from the firm and is serving his notice, according to an internal memo seen by Tech in Asia.

In the span of eight months, “there’s been a big sea of change in the leadership team,” another ex-employee says. The person adds that just a handful of staff members who took MoneyHero public remain.

“The group head of marketing position was never filled by a person for long,” says one former employee, who notes that the role has been replaced several times since 2022. “There was no clear direction over how the company would establish marketing goals… It was very chaotic overall.”

The person adds that the multiple leadership transitions affected morale “because a lot of changes were happening very quickly.”

See also: Layoffs at Richard Li-backed Hyphen Group after SPAC deal falls through

CEO Murthy admits that MoneyHero has experienced “significant growth and transformation” in the past year, first with its SPAC listing and then with a new management team.

However, he says the company’s new leaders have a clear strategy, which includes scaling the business, strengthening MoneyHero’s market position, and delivering value to its customers.

He adds that management is “fully committed” to executing its strategy and “driving shareholder value.”

“Project Killbill”

At the start of the year, MoneyHero launched a project – dubbed “Project Killbill” – which took aim at MoneySmart, say former employees familiar with the project.

This involved attempting to become the exclusive distributor of financial products with banks and insurance companies and doing a “copy and paste” of MoneySmart’s product designs, functionality, and features, according to ex-MoneyHero staff.

One of them notes that MoneySmart was just one of several financial comparison sites that teams were tasked to copy elements from.

Murthy declined to comment on internal projects or its objectives “as a matter of corporate policy.” He also declined to acknowledge or comment on “unfounded rumors” that the firm sought to copy other price comparison platforms.

The CEO added that negotiating exclusivity clauses is a “common business practice” among the firm and its peers.

In 2023, MoneyHero also ran various tongue-in-cheek campaigns dissing its competitor. A campaign late that year featured memes and took direct stabs at MoneySmart.

Former employees say such tactics took time away from efforts to strengthen MoneyHero’s own products and brands.

While these campaign “did well, and sales went up, these kinds of campaigns are short bursts… If you want to build a brand ethos, you have to go beyond tactics,” one source adds.

MoneySmart’s Nair claims many of its employees have been approached by recruiters engaged by MoneyHero to join the firm. The CEO adds that MoneyHero proffered “substantial pay increments,” even offering to cover the legal costs of any potential lawsuits that might arise.

This wasn’t just a theoretical concern. In January 2024, MoneySmart filed a lawsuit seeking to prevent Artem Musienko, its former head of tech for its insurance division Bubblegum, from working at a MoneyHero subsidiary.

In April this year, the Singapore High Court concluded that MoneySmart’s non-compete clause was unreasonable and unfair. The case was settled out of court in June.

In response to Tech in Asia‘s questions on whether MoneyHero had actively poached MoneySmart employees, Murthy says the firm offers “compelling equity incentive plans for new hires.” He adds that the company has built a “world-class” team in part through “internal development” and by making “key outside hires.”

A question of sustainability

From late 2023 to early this year, MoneyHero ran various promotions where it gave away free iPads tied to credit card sign-ups. While this was effective in driving conversions, it also drove costs up.

From being close to break even in the first half of 2023, adjusted EBITDA losses in the first half of 2024 stood at US$16 million.

On its Q1 2024 earnings call, Murthy noted that the company had “ramped up marketing and brand campaigns” that quarter. These efforts, he said, were critical to expand its footprint and market leadership position.

Murthy added that this was a “deliberate and strategic” investment in growth that would lay the foundations for a “stronger, more sustainable business model.”

But even if MoneyHero could grow its user base substantially through these methods, driving loyalty among customers so they make repeat purchases can be challenging if purchasing behavior is highly dependent on freebies.

A former employee notes that there are “limitations” to MoneyHero’s customer acquisition strategy, which prioritizes credit card sign-ups, without a similar emphasis on other financial products.

In markets like Singapore and Hong Kong, where consumers already have multiple credit cards, generous freebies could drive initial engagement, but they do not foster genuine loyalty, the person adds.

According to Murthy, MoneyHero’s strategic investments in customer acquisition and M&As are “starting to bear fruit.”

In the second quarter of 2024, the firm increased approved applications by 50% and memberships by 53%, despite a 17% decline in monthly unique users, he says. This demonstrates an “improved targeting of high-quality customers,” the CEO shares.

As of September, the firm is expecting to achieve adjusted EBITDA profitability on a monthly basis by the fourth quarter of this year.

If the company succeeds, it would not have been an easy journey. In July, MoneyHero laid off 80 employees, a move it said was necessary to cut costs and enhance its “long-term financial health and profitability.”

To be fair, MoneyHero has diversified into other business streams. With an insurance brokerage license, the firm can engage in revenue-sharing with insurance partners.

In 2023, insurance contributed 7.3% to the group’s revenue, a 120% year-on-year increase. Creatory, MoneyHero’s affiliate marketing platform, also contributed over 17% to the group’s revenue.

While acquiring a direct competitor could certainly drive growth in a more sustainable way, that option appears to be off the table.

MoneySmart’s Nair tells Tech in Asia the firm does not see “any feasible path” for MoneyHero to acquire MoneySmart that would provide a positive outcome for all stakeholders. “While both businesses operate in a similar space, we are on diverging paths in terms of strategy, financial sustainability, and outlook,” he adds.

Still, other doors could open for MoneyHero in its quest for growth.

According to Murthy, MoneyHero’s MoneySmart bid is “just one of many opportunities” the company is looking at within the Asia-Pacific fintech sector. The company continues to evaluate targets that align with its strategic goals, he adds.