FinTech Jeff wants to increase lending in South Asia
With no creditworthiness, limited financial transaction history, and large numbers of people who don’t even have a bank account, lending money in Vietnam is not an easy task. While most financiers would run away in such an environment, CEO Toms Niparts from Jeff, an app-based lending platform based in Latvia, saw this as a great opportunity.
“We are only focusing on Southeast Asian economies where financial inclusion is really an issue,” said Niparts recently in a conversation with PYMNTS about his start-up.
“So we basically combined the best of both worlds: our know-how about financial services from the west of the world with the enormous opportunities in these Asian countries.”
After his first year in business – a year that included navigating the COVID virus – Niparts said the Jeff app has been used over a million times and has helped over 200,000 people get loans.
“And that’s only a year. It’s just one country. So we hardly scratch the surface in Vietnam alone, ”he said.
Know-how meets opportunity
According to Niparts, 90 out of 100 loan seekers are likely to be turned down because banks lack the financial data to calculate risk and they use very outdated methods to obtain it.
“After the analysis, we saw that there was a lot of potential for disruption,” he said, noting that banks and intermediaries were still exchanging data in Excel files. “So we’re not even talking about some primitive APIs, but about the Stone Age, manual data exchange.”
With this in mind, Jeff was able to establish himself in the marketplace by providing a simple, convenient platform for consumers and using alternative data to create credit profiles that increase the likelihood of closing deals and matching a borrower and lender.
Big pain vs. new best friend
“It’s a big pain in Southeast Asia for the people, too financing from so-called legitimate sources, “Niparts said, adding that Jeff’s business plan aims to give restricted consumers the ability to access funding with other types of data.
The app itself, he said, is driven by a chatbot-like questionnaire that starts after downloading the app and triggers a process the company touts as the best loan offers in just two minutes.
“Jeff is not a dot-com loan comparison site. Jeff is your new best friend for finding the best financing deals, ”he said. “It’s as intuitive as talking to your colleague or friend over Facebook or WhatsApp or another messenger.”
Currently, the loans Jeff arranges typically range from $ 100 for a new phone to a few thousand dollars for a motorcycle, but the company hopes to add more large home loans in the future.
Building an alternative credit score
“Our goal here is not to be in a position where we are the largest credit comparison or aggregator site out there,” said Niparts. “Our goal is to be the people who can provide creditworthiness in a situation where there is no traditional financial data.”
Building the business, in Vietnam or elsewhere, is a long process where customer acquisition is the greatest cost, and it does this through the aggregation and analysis of data.
“It really comes down to understanding how we can get more behavioral data from people, how we can try to forecast and predict more of their spending and income patterns,” he said. “What we are looking for and what defines or destroys the business is a higher frequency that brings with it a higher volume of data.”
Once a relationship is established, be it with a bank, telecommunications or insurance company, Jeff offers his credit partners additional data, according to Niparts, which they can then monetize through additional finder fees and commissions. As Niparts explains, the more consumers can use Jeff, the more data they can collect to build better credit and, in turn, to support additional future lending.
“Of course, it’s important to understand whether we’re bringing them with us [lenders] a poor quality clientele, they will simply end their partnerships with us. So we are very aware and careful about this, ”he said.
I start now
While Jeff is currently focused on Vietnam, the company plans to expand into Indonesia and the Philippines next, with longer-term views of Bangladesh and Pakistan, a destination that would place it in five of the 10 largest Asian nations with total populations in excess of 600 million consumers. Compared to the West, Niparts said Jeff was “able to do a little more” in Asia because of looser data regulation and restrictions.
“We just started in 2020, which was a unique time to be born a startup,” said Niparts, but admitted that we were lucky enough to land in Vietnam, both economically and in terms of most of its competitors did better to contain the coronavirus.
“Our goal is to be in the economies that we have identified as developing markets, where we see tremendous potential for this type of solution where non-financial data can be used with great utility in promoting financial inclusion,” said Niparts.