Interview Hui Yik Seong, Founder of Direct Lending

In this delayed interview of Hui Yik Seong, Founder of Direct Lending, we explore the company’s partnership with PETRONAS AutoExpert which is crucial in their business strategy of delivering seamless needs-based auto service financing to car owners.

But first we asked Mr Hui Yik for an overview of Direct Lending’s mission and core business objectives.

Hui Yik says Direct Lending’s mission is to bridge the credit gap and foster financial inclusion by creating a sustainable and scalable digital financing ecosystem.

“We aim to improve the quality of life for hardworking adults by providing safe, affordable financing solutions that address their needs seamlessly and personally. Starting as a digital personal financing marketplace in September 2016 connecting borrowers and lenders, we have successfully built a sustainable business, disbursing over RM300 million in financing,” he says…

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With the vision to provide a seamless financing experience for every hardworking adult, Direct Lending launched its first needs-based financing solution in March 2022, a Shariah-compliant auto service financing that enables car owners to obtain funding at a workshop to pay for their essential car repairs and service instantly. 

In December 2022, Direct Lending expanded its product suits by offering financing to micro-SME businesses, including car workshops we partnered with.

Direct Lending – Strategy and goals

Here are the questions and answers from Mr Hui Yik Seong.

Business News Malaysia: How does this partnership with Petronas AutoExpert align with Direct Lending’s broader business strategy and goals?

Hui Yik Seong: Our partnership with PETRONAS AutoExpert is crucial in our business strategy of delivering seamless needs-based auto service financing to car owners. It amplifies our scalability potential and gives us access to an extensive network of reputable workshops. It expands our customer base and solidifies our position as a trustworthy and innovative player in the aftermarket industry. This partnership aligns with our mission to bring financial solutions closer to car owners and car workshops, as these financing solutions also help to grow sales and enhance cash flow for the car workshops, which many are micro, small, and medium enterprises, as more car owners can afford to repair and service their cars by using this financing.

Could you explain the importance of Shariah compliance in BNPL solutions, particularly in the Malaysian context?

Shariah compliance is particularly important in the Malaysian market, given the large Muslim population and the increasing demand for Islamic financial products. Being Shariah-compliant, endorsed by Amanie Advisors, a leading Shariah advisory firm, our auto service financing offering aligns with Islamic principles of ethical and responsible lending. Our Shariah-compliant offering caters to consumers seeking ethical and responsible financing options, expanding financial inclusion.

Limitations for Car owners

What challenges or limitations have car owners faced in accessing flexible financing options for vehicle maintenance prior to this initiative?

Before our auto service financing, car owners often struggled with high out-of-pocket costs for unexpected vehicle repairs and maintenance. Traditional financial services have often been less accessible to those without a formal credit history or those considered “credit underserved”, including those without a credit card facility. Our initiative aims to alleviate this pain point by providing quick, accessible, and responsible financing.

What are the key factors contributing to the increasing popularity of BNPL solutions among consumers, especially among the younger demographic?

The younger demographic values convenience and speed, which are key features of BNPL solutions. The ability to split payments into manageable amounts without undergoing complicated paperwork or lengthy approval processes is highly appealing to younger consumers.

In the context of the BNPL model in Malaysia, what trends or statistics have you observed, and how does your offering align with these trends?

The BNPL model has generally seen widespread adoption globally and also in Malaysia.  According to the latest Financial Stability Review by Bank Negara Malaysia (BNM), Malaysia has seen a steady growth of the BNPL model in 2022, with 44 per cent of users between the ages of 18 and 30. Our Shariah-compliant auto service financing uniquely aligns with market needs, particularly given the growing demand for Islamic financial products.

Shariah-compliance

How does Direct Lending’s Shariah-compliant BNPL solution benefit car owners in Malaysia, and what sets it apart from traditional financing options?

Our Shariah-compliant auto service financing option allows car owners to manage unexpected costs more affordably. It sets itself apart by offering quick approval times and convenient processes. It’s specifically designed to serve those without access to traditional credit facilities, including credit cards, ensuring broader financial inclusion.

Our auto service financing has received positive reviews from our customers. Here are some of the reviews among the 2,000 5-star customer reviews on Direct Lending Google Business Page.

Are there any plans to expand this Shariah-compliant car service installment plan to other regions or markets?

In the short term, we will focus on and grow our presence in the Malaysian market so that we can serve more car owners and car workshops in Malaysia. 

We plan to expand our solution to Southeast Asia as our auto service financing addresses a critical issue that has widespread implications in Malaysia and across Southeast Asia.

• Based on our estimate using the ASEAN Statistical Yearbook 2021, there are approximately 8 million passenger cars in Malaysia and 90 million in Southeast Asia over 5 years old. This represents a massive market that requires regular and emergency auto servicing.
• According to the World Economic Forum, 6 out of 10 people in Southeast Asia remain underbanked or unbanked. Many lack access to formal bank borrowing, including credit cards. This significant gap in financial access presents an enormous opportunity for Direct Lending to step in and offer viable financing solutions.
• Southeast Asia’s auto repair and maintenance market closely resembles that of Malaysia, consisting predominantly of micro, small, and medium-sized workshops. This similarity suggests that our business model can be replicated in neighbouring countries.

Driving innovation

How do you envision the future of Direct Lending in the automotive service industry?

We aim to drive innovation and financial inclusion in the industry by continually refining our solutions, expanding our partnerships network, and exploring new ways to serve our customer base effectively and responsibly.

For example, by leveraging our relationships with car workshops and data-driven insights into their sales, Direct Lending is uniquely positioned to extend business financing to them in growing their business, as many are micro, small, and medium enterprises.

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