How is Atome Financial Supporting More Consumers Across Southeast Asia’s Flourishing New Economy?

Private consumption has been a key driver of Southeast Asia’s robust growth since the pandemic, amid a challenging external environment that continues to temper its export recovery.¹ Given that the majority of the region’s population remain unbanked or underbanked,² and credit card penetration rates stand below 10% in most of its countries,³ the popularity of buy now, pay later (BNPL) services has been pivotal to sustaining consumption growth. BNPL enables consumers to buy products on credit, making repayments in instalments over time.⁴ It is increasingly popular for purchases made using e-commerce platforms in Asia Pacific, accounting for 4.4% of transactions across the region in 2023 and projected to reach 7.7% by 2028.⁵

Singapore-based Atome Financial, founded in 2019, has become one of the leading BNPL and embedded financing platforms in Southeast Asia, supporting USD1.5 billion worth of deferred payments on consumer purchases in 2023.⁶ The financial technology firm, which is part of a group backed by prominent venture investors including SoftBank’s Vision Fund 2, Warburg Pincus, Northstar Capital and Singapore’s EDBI, also provides a range of financial products including cards, microlending and insurance through the Atome mobile app and digital consumer loans in Indonesia through the Kredit Pintar mobile app.

Atome partners with thousands of online and offline merchants,⁷ including global brands such as Amazon, TikTok Shop, SHEIN, Marks & Spencer’s, Sephora, Zalora and Agoda. By using artificial intelligence to gauge consumers’ creditworthiness as well as control and manage credit risk across the consumer lending lifecycle,⁸ the company has been able to broaden financial inclusion across the region by improving access to risk-managed affordable credit and responsible financing.

Growth financing

With a view to supporting the continued growth of its loan book by its subsidiaries in Singapore, Malaysia and the Philippines, Atome turned to HSBC to refinance its existing USD100 million senior debt facility, which is secured against its consumer loan receivables.

"It is testament to the trust and confidence they have in our mission and track record in using technology to provide consumers with easier, simpler, and more affordable access to digital-first financial services, so we can drive broader financial inclusion across both developed and emerging markets in Asia.”

The comprehensive, multi-product financing package leverages HSBC’s strengths and capabilities across syndication, loan agency, risk management and liquidity solutions to provide a scalable and distributable financing that can potentially be upsized and distributed to a variety of other financial institutions.

“HSBC stands ready to support Atome’s continued expansion through our strong regional and global network, and comprehensive suite of banking capabilities. Our commitment to enabling the growth of Southeast Asia’s new economy champions is reflected through our strategic initiatives like our US$1 billion ASEAN Growth Fund.”⁹

Bespoke structuring

HSBC structured the facility to suit Atome’s needs as a high growth company in expansion mode, with monitoring triggers that are tied to the performance of Atome’s loan portfolio rather than typical corporate-level financial covenants. It allows Atome to match its assets and liabilities through a pre-agreed funding advance rate, which is a percentage of a portfolio of eligible BNPL receivables for the company. The loan’s structure also allows Atome to manage “negative carry,” or situations where the income on its loans would cost more than borrowing to finance them, through adjusting drawings in line with changes in its own loan book.

Moreover, the loan covers the whole Atome Financial group, giving it the flexibility to use the proceeds to support product and business growth in markets including Singapore, Malaysia, the Philippines and Indonesia.

As BNPL continues its expected growth, HSBC’s support for Atome will help the company continue its expansion by providing valuable liquidity to consumers in Southeast Asia. The region’s broader economy should benefit as more consumers are able to use credit to manage the cost of more significant purchases.