I filled in many forms. I spent days understanding the terms. I waited for approval. But I failed.
That is a typical cycle of a layman applying for a loan. If there is one time when you really dislike banks is while applying for a loan or even worse trying to understand how it will work. Bringing Scandinavian chic to Fintech in Asia, Lendela is introducing its lending platform in Southeast Asia.
It is a consumer-centric online lending platform, a “first” in this part of the world. Founder and CEO Nima Karimi has spent over two decades in the Nordic banking and finance industry with platforms like Zmarta and Lendo, building them up from scratch. And hopes to bring his expertise to become the “most reliable lending space” in Asia.
“Europe is a fairly mature market and Africa is too slow and after experimenting with the model in Brazil, Southeast Asia seemed exciting,” said Karimi. With Cocoon capital as lead investors and IMO, Lendela started in Singapore in July last year. It has since entered Thailand, Malaysia and Hong Kong with local teams lead by country managers.
Karimi told me it was simply the dissatisfaction on one’s face while chasing a loan that led him to build this. Loans are a unique product and probably the only one where the seller can deny it. It also lacks transparency as the seller (banks) have a lot of information about the consumers (loan applicant) but not vice versa, necessarily. “That’s what Lendela wants to change,” added Karimi.
Almost as if matchmaking, Lendela works with the consumer right from the start of the loan application to disbursement. “Borrowers don’t know where to find a loan, so at Lendela they just fill in one form and we match them to the right loan partner,” said Karimi. For now, Lendela is focussed on consumer loans like auto, home, etc.
Its a win-win as for lenders or banks it saves user acquisition cost, the effort, and process to screen applicants and processes. They have about 18 lending partners in the region and 30 in the Nordics. This increases the chances of loan approval as consumers have a wide range to match with. Karimi added that the model works effectively when they have a great variety of banking partners. Lendela works on a commission basis with banking partners as they “want to share the risks and success of the business”.
To Asia with love
“In the Nordics, it is hard to sign banks as compared to Southeast Asia,” said Karimi. Since it is not a very widely used concept and not all loans are formalised via banking in this region getting both consumers and partners can be a challenge sometimes.
Also, each country in the region is different and so are their regulations but the market is ripe and there is a thirst for innovation. For eg: In Singapore, banks can market loans but money lenders can’t. In Thailand, credit reports are generated manually by non-banking institutions only.
The Hong Kong lending market is regulated through HKMA which set in motion the Open Banking initiative last year that enables fintech firms to connect to banks via APIs and over time enable users to manage more of their traditional banking services, including loan applications, via connected platforms.
So governments in Southeast Asia are adapting to fintech friendly regulation with the likes of Singapore’s MAS Sandbox and Thailand’s digital identity (NDID). Hence Karimi feels his “timing is right”.
Karimi believes the novelty of Lendela’s platform, its product-driven approach, and Nordic-inspired UX will work to their advantage to attract consumers in Southeast Asia.
Let’s take a microscopic look at how it is faring in some of its Asian markets:
Thailand: It launched in May this year and signed an exclusive partnership with Kaidee- Thailand’s largest online marketplace. This enables Kaidee’s customers to apply for loans and compare loan offers online at Lendela.th and has been a huge success for both parties so far said Lendela country manager Jear Worrawut.
It is very complicated for consumers to understand where they can find the best loan offer and the level of financial education in Thailand is low. The process of applying for a loan is rarely digital. It is very common that consumers have to visit a bank branch to be able to sign the loan. So there is potential for Lendela to help customers.
Hong Kong: It is a market with over 160 banks and 2,000 money lenders that fiercely compete for the attention of intending borrowers. With Lendela, each lender can reduce their customer acquisition cost, the marketing risk of acquiring those customers, and overall reduce administrative tasks related to each loan application. Consequently, resources at banks and lenders will be freed up to focus on core business activities such as underwriting, expanding product offering and customer monitoring.
“In Hong Kong, there are some bad connotations with lending money, including companies that act as agents, third parties or intermediaries to banks and lenders so we spend a lot of our time explaining how we are different, and how we are empowering consumers,” said Peter Edsinger, General Manager Lendela Hong Kong.
Malaysia: The Malaysian economy is expected to grow at a slightly faster pace in 2020 according to the Economic Outlook 2020. The government’s plans to implement the ‘Shared Prosperity Vision 2030’ which aims to raise the living standards of all Malaysians to a decent level by 2030, may also increase spending over the next 10 years. For individual retail clients, the loan landscape in Malaysia is a very tricky to navigate due to non-standardised rates and processes of all loan providers (both banks or lenders); the availability and aggressiveness of unlicensed lenders; level of the Malaysian public’s financial awareness on their own credit score or financial status and their eligibility status.
“The Malaysian public may not be completely open and trusting of an online platform which deals with helping them find loans, simply because of the many unlicensed moneylenders that are available. Clarity, transparency, and security on that will have to be assured by us at Lendela, that we only partner with licensed and registered loan providers,” said Firdaus Nejim Al-Asedi, country manager, Lendela Malaysia.