Interview with ID Finance co-founder and CEO Boris Batin – EU-Startups
An interview by EU-Starups:
ID Finance is a fast-growing fintech company specializing in data science, credit scoring and digital finance in emerging and well-developed markets. Founded in 2012, the company is headquartered in Barcelona, and has conducted two successful funding rounds so far. ID Finance currently has offices in Spain, Poland, Georgia, Russia, Kazakhstan, Brazil and Belarus. The most prominent ID Finance assets are the smart data online lending services in different niches: MoneyMan, AmmoPay, and Solva. MoneyMan, for example, is an online lending service with more than 3 million registered clients. The idea behind MoneyMan is to help people to solve their short-term cash flow needs by providing a fully automated loan service operating round-the-clock.
Earlier this week we caught up with the ID Finance co-founder and CEO Boris Batine to learn more about story behind his company and about his plans for the future.
Boris, what problem does ID Finance solve and how are you different from other online lenders?
While in Europe most people have access to a bank account and credit card, emerging markets can be very different. Banks are often inaccessible for those outside of cities and people are regularly denied loans or charge uncompetitive rates due to past mistakes. In Mexico, 61% of its 127.5 million population is unbanked and only 25% have access to a credit card. In Brazil 40% of its 207 million population is blacklisted from the traditional banking system. We’re talking about a massive structural demand for credit that is unmet by incumbents.
ID Finance is pioneering fintech innovation in many of these markets. Together with our partners, we have built the digital finance infrastructure for balance sheet lending in seven countries in less than five years. We can now reach profitability within a year of launching into a new territory and we will be launching in additional markets this year.
We offer a variety of products ranging from short term loans, to a POS installment service and long term loans. We process 100% of our loan applications in real time and have one of the best performing risk management systems in the industry thanks to our advanced data science capabilities.
I should also emphasise that while we are growing aggressively, we also practice responsible lending and we are in constant dialogue with the regulators and central banks.
What alternative sources of data do you use to underwrite your customers?
We take a Big Data approach working with a number of partners – from traditional credit scoring agencies to mobile operators, utility companies and social media platforms. We also gather geolocation data as well as behavioural data such as typing patterns. All of this helps to measure creditworthiness as well as identify fraudulent applications. And the more applications we process, the better our risk management technology performs. Of course we are mindful of privacy concerns and we anonymise the data to protect our customers.
How is next generation data analytics and data science transforming your industry?
Data science is improving the quality, precision and speed of loan underwriting to deliver more competitive rates and provide a more convenient service. In fact we’re applying machine learning across our business, from reviewing borrowers to optimising digital marketing campaigns and providing efficient customer service.
But this is about much more than improving processes. In emerging markets creditworthy consumers are regularly denied loans or mortgages. This impacts on people’s lives and holds back economic growth. In fact, McKinsey believes emerging markets could boost their economies by $3.7tn by fully embracing the potential of digital finance.
Which markets do you operate in currently and which markets are you planning to enter soon?
We operate in seven markets – Russia, Poland, Georgia, Kazakhstan, Spain, Brazil and Mexico. We are particularly excited by the opportunity in LatAm. It is fast becoming one of the most fertile grounds for fintech. Goldman Sachs estimates the Brazilian fintech sector will generate revenues of $24bn over the next 10 years, while fintech startup accelerator Finnovista believes fintechs could take up to 30% of the Mexican banking market in the next decade. We are planning further expansion within the Americas and expect to launch in Colombia, Peru and the US by the end of 2019.
Why did you choose Barcelona as your headquarters?
Barcelona has a wealth of tech talent and is relatively inexpensive. The Mediterranean climate is also a big plus. We see Barcelona as a gateway to the Spanish market with a population of nearly 47 million people – one of the largest and most uncompetitive in Europe. But Barcelona has also been a springboard for launching into LatAm with our presence in Spain helping to build awareness and credibility in countries such as Mexico.
According to your website, ID Finance already counts 400+ employees. With such a fast growing team, how do you make sure everybody stays motivated and how do you support the corporate culture?
We are very fortunate to have a team of hugely talented and high performing individuals at ID Finance. We encourage our staff to constantly challenge the status quo and ensure they have the tools and resources they need to succeed. Our desire for perpetual improvement is something we have instilled as part of our corporate culture from day one.
As a business we are growing rapidly and expanding across multiple countries. We actively encourage our people to seek opportunities further afield to gain exposure to the different markets and to take a lead on projects where they have particular expertise.
We strive to be the best company we can be and have three specific leadership principles which shape our behaviours and ways of working. These focus on the following areas: our vision and strategy, execution and results, and team work and collaboration.
We have a wealth of talent in the company and reward and promote from within. In fact a number of our management team and heads of departments started their careers with us as managers or graduates and have worked their way up to their current positions.
What are the big milestones you are looking to achieve in 2018 and beyond?
Our LatAm growth and expansion is a key priority for 2018 and beyond. We plan to launch in Colombia later this year with Peru to follow. And we expect to be the biggest non-bank lender in Brazil by the end of 2019. We also plan to raise $170 million from bond issuances to support our growth, with the aim of being in 12 countries including the U.S. by 2021.