GCash Blog 3: How GCash Funds Its Lending Business - behind the structure
Introduction
Scaling digital lending is never just about customer demand or smart credit models. At some point, the question becomes: where does the money come from to fund the loan book?
For GCash, which serves over 90 million users in the Philippines, answering that question was critical to turning lending from an experiment into a sustainable, revenue-generating product line. Much like Akulaku in Indonesia, GCash has had to innovate not only on the front-end of lending (applications, scoring, disbursement) but also on the back-end funding structures that make large-scale lending possible.
From Payments to Credit — A Capital-Intensive Shift
Payments businesses like GCash are transaction-rich but capital-light: they move other people’s money. Lending flips that model. It requires substantial capital reserves, risk absorption, and regulatory oversight.
Rather than carrying all that balance sheet risk themselves, GCash developed a partnership-driven funding model, working with licensed banks and financial institutions that could provide the capital and risk capacity. GCash, meanwhile, contributed what it did best: customer data, engagement, and technology rails.
How GCash Structured Its Funding Partnerships
GCash’s partnerships were not one-size-fits-all. Instead, they evolved along three tracks:
Risk-Sharing Partnerships with Banks
Banks provided loan capital.
GCash provided customer acquisition, GScore-based underwriting, and servicing.
Risk and revenue were shared, with banks earning interest spread and GCash taking fees.
Revenue-Sharing Partnerships
In some arrangements, GCash did not carry credit risk at all.
Banks used GScore to make independent credit decisions, while GCash earned a share of lending revenue in exchange for access to its platform and customer base.
Structured Funding for Growth
As the portfolio scaled, GCash layered in more structured financing.
This included securitisation-style arrangements, where pools of loans could be refinanced or funded by institutional investors.
The Role of GScore in Funding Confidence
These structures worked because GCash could demonstrate predictive power through its GScore credit model. Banks were comfortable allocating capital to GCash-originated loans because they could see, in the data, how repayment behaviour mapped to customer activity.
For investors and funding partners, GScore became the confidence mechanism — reducing perceived risk and enabling bigger ticket lending programs.
Challenges Along the Way
Early challenges included:
Aligning incentives: banks were conservative, while GCash wanted rapid scale.
Regulatory scrutiny: ensuring consumer lending complied with Bangko Sentral ng Pilipinas (BSP) requirements.
Portfolio monitoring: proving that loans remained healthy beyond the first few cohorts, requiring governance dashboards and reporting.
Each challenge reinforced the need for joint governance forums between GCash and its partners — regular committees where data, performance, and risk appetite could be openly managed.
Lessons for Other Platforms
The GCash model demonstrates that:
You don’t need to own the balance sheet to win in lending — but you do need partnerships that align risk, revenue, and governance.
A strong, transparent credit score (like GScore) is not just for underwriting — it’s a tool to attract funding partners.
Scaling requires moving from pilots to structured funding (securitisation, institutional partnerships) to keep capital flowing.
Conclusion
GCash’s journey shows that the art of digital lending isn’t just in scoring models or sleek apps. It’s in how you fund the loan book — sustainably, transparently, and at scale. By combining its GScore, platform reach, and innovative partnership models, GCash transformed lending from a side product into a core growth engine.
For fintechs, wallets, and mobile money providers across emerging markets, the lesson is clear: funding structures are strategy. Get them right, and lending can be your most profitable business line.
