‘Loan rate cap risks hurting borrowers’

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Since launching about six years ago, JuanHand has built a sizeable borrower base, with over 20 million registered users, around three million active users at any given time, and P70 billion in loans disbursed as of September.

MANILA, Philippines — As regulators revisit rules for unsecured digital lending, financial technology firm JuanHand is making an unusual plea: be careful what you fix.

While proposals to reduce interest rate caps aim to protect borrowers, JuanHand president and CEO Francisco Mauricio warns that well-intentioned reforms could end up choking financial access for the very people they seek to help.

In an exclusive interview with The STAR, Mauricio said that the company supports the Securities and Exchange Commission (SEC)’s renewed effort to curb predatory lending.

However, lowering the lending rate cap to 10 percent from 15 percent could unintentionally “lock out” the unbanked and high-risk borrowers whom fintech lenders serve.

“We’re happy with the current 15 percent cap. No one is really complaining about that,” he said. “What borrowers are complaining about are predatory lenders and non-compliant lenders who violate the 15-percent cap and go way beyond that.”

He said these predatory lenders include a combination of fintech lenders and loan sharks, who charge rates of 50 to 80 percent per month.

Mauricio emphasized that lowering the rate cap may sound consumer-friendly, but the downstream effect would be stricter approval processes. Compliant lending apps like JuanHand, he said, would be forced to limit credit to only the safest customer profiles.

“If you lower the interest rate, we will lower approval rates. We will only take the non-risky borrowers,” he said. “We estimate we’ll end up disapproving more than 300,000 Filipinos every month — many of them underserved, grassroots borrowers who need access the most.”

“That’s the impact of lowering the interest rate cap, because we don’t see them as high risk. We see them as high potential. They deserve a chance. These are the credit invisibles. Many don’t have any credit footprint. Our purpose is to give them one,” he added.

For Mauricio, lowering the cap too much becomes counter to the government’s broader goal of financial inclusion.

Keeping credit open for the unbanked

Since launching about six years ago, JuanHand has built a sizeable borrower base, with over 20 million registered users, around three million active users at any given time, and P70 billion in loans disbursed as of September.

The platform has evolved into one of the country’s most widely used fintech lending apps, a trajectory Mauricio attributes to its ease of use and artificial intelligence (AI)-powered credit scoring.

Traditionally, banks rely on documents that many Filipinos cannot readily provide, such as proof of billing, employment certificates and tax records. JuanHand, by contrast, needs only one valid ID, a smartphone and a few minutes to process an application.

This approach, based on alternative data and machine learning analysis, helps the lender verify identity, assess risk, and detect inconsistencies in real-time.

One encouraging trend Mauricio highlighted is that borrowers are using credit more strategically.

While emergencies and utility payments once dominated the reasons for borrowing, the fastest-growing segment now consists of Filipinos borrowing to earn money. These are small online sellers, sari-sari store owners and micro-entrepreneurs in e-commerce.

At the same time, repayment behavior has shown significant improvement. “More Filipinos love to borrow, but they also love to pay,” Mauricio said. “Default rates have gone down sharply since we started.”

Though consumer finance remains riskier than bank lending with industry-wide non-performing loans hovering at around 18 percent annually, JuanHand’s NPLs are “significantly less” due to what he calls its “gold standard” AI-driven risk assessment.

At the heart of JuanHand’s expansion is the technology of its parent firm, Finvolution Group, which recently showcased its AI capabilities at Money20/20 Asia.

Mauricio described AI as “the innermost core” of the company’s processes. The system cross-checks self-reported information with telco scores, digital footprint, government-verified data and various behavioral indicators, all in under a second.

As AI’s growing role raises concerns, so do concerns about data privacy and fairness. Mauricio stressed that strict guardrails already exist under the National Privacy Commission.

“NPC laid out what is allowed and not allowed. As long as you comply, everyone’s data is protected,” he said, though he acknowledged that non-compliant players still pose danger to the industry.

He noted that fully settled transactions are subject to data disposal. “Once you’ve settled your loan, we don’t keep that data. It’s disposed of. We cannot use it unless you permit us to.”

Despite heavy investment in automation, Mauricio said JuanHand is committed to maintaining a human touch — a quality that many digital lenders are phasing out.

The company operates live customer service seven days a week from 9 a.m. to 6 p.m., with plans to extend it to 12 hours daily. This helps first-time borrowers overcome their initial distrust of online lending, which is still a common concern in an industry marred by aggressive collection practices and fraudulent apps.

Fight vs bad actors

Mauricio repeatedly returned to the issue of non-compliant lenders or those charging abusive rates, misusing data and evading SEC rules. He said JuanHand and its peers in the Consumer Lending Association of the Philippines (CLAP) continue to work with regulators to purge these players.

“They’re destroying the industry. We want them out,” he said. “Responsible lenders are aligned with regulators. We want borrowers protected.”

As the SEC finalizes proposals to tighten lending rules, Mauricio hopes regulators will differentiate between compliant fintech lenders and predatory actors.

Lowering the cap, he cautioned, may not protect people with low incomes. It may push them back to “5-6” loan sharks charging 80 percent a month.

For JuanHand, the challenge is clear: balance affordability with accessibility, technology with ethics, and speed with trust. As the country’s fintech landscape evolves, the company says its mission remains unchanged.

“Our purpose is financial inclusion,” Mauricio said. “That’s why we’re here.”