Singapore - measuring risks on retail side

To issue credit card or small loan allows the economy to grow, as it gives more and more money for people to spend before they earn it. If the average spening of the month is 1000 units, than with a credit card with a limit of 3000 can the consumer purchase additional 3000 units of service, goods or have additional savings.

Empowering the consumer with this ability is adding various components together:
a) how much is the seller able to pay for his potential customer being able to pay for service or goods (2%, 3% or 10% UPF)
b) how much is the consumer able to pay for this ability to spend banks money (27% p.a.? INT)
c) what is the risk the customer will not be able to pay for his obligation (NPL)
d) what is the financial institution paying to distribution of the financial product (SERVICE)
e) what is the cost of money financial institution pays for its resources (COF)
f) what is the expectation of the shareholder fir the return on investment (ROI)

Than it counts as:

UPF% + INT% = NPL% + SERVICE% + COF% + ROI%

If we wish to set INT as low as possible we need to work with other variables.

UPF% could be increased as long as the seller understands the significance of the whole statement. It could come to the point, where the seller is giving the whole advantage to consumer and therefore no need to pay any interest at all. I am afraid that 10% would need to be communicated properly + it shall not be limited by any regulation, as recently in EU it is

NPL% to influence is important to issue credit cards with sense. Seeking the lowest risk customers is not a solution, as this people usually doesnt need credit cards or if so they are not willing to contribute to income. Usually a consumer structure with higher risk, but not too risky is the best to aim. They will be able to spend the money and see the advantage in additional spending. And also they will have ability to pay the interest and later instalment back. Also low NPL allows customers to pay lower rates.

SERVICE% is currently a challenge, as bank employees earning low salaries are no willing to work. Also the effectively of the bank is hit, as the process is slow and takes too long. This is why FinTech ia jumping in, to allow people to get closer to financial institutions

COF% is now very low and in many banks close to 0%

ROI% as long as COF% is close to 0% is also minimal.

Therefore

INT% = NPL% + SERVICE% - UPF%

Once we decrease SERVICE% and NPL% we get very low UPF% and therefore absolute WIN / WIN situation