Experienced bank manager Andrei Ponomaryov had been considering his project for two years before deciding to start his own business. And there was something to think about. Russia has unsatisfied demand for consumer lending because banks are too slow and inert; getting a loan is difficult and expensive. On the other hand, approving loans to anyone who asks is a direct path to ruin. Approving instant loans while preventing the institution’s own bankruptcy requires high-tech solutions. The Webbankir financial platform is developing not only as a financial, but also as an IT company: 25% of the microfinance institution’s employees are developers. How can IT transform the lending business today?
First of all, the entire process of issuing a loan has to be moved to the internet. Prior to the platform’s development in 2012, the term online lending meant applying for a loan via the internet. Webbankir automated the process deeper, including processing the application and identifying the client, and most importantly, organizing the transfer of money directly to the borrower’s bank card. Even now, this form of lending still looks innovative; at the time the platform was launched in 2012, when a bank transfer could take several days, it seemed like an absolute innovation. The founders of Webbankir had to negotiate with the Visa payment system, and the payment giant eventually agreed for an experiment. That gave the company a good speed gain – one of the main competitive advantages for microfinance institutions compared to banks (Webbankir is a microfinance company).
Furthermore, loans cannot be issued fast enough without automated credit scoring. A scoring system’s quality depends on the accumulated statistics. Webbankir started with 80% of defaults. In the first month of operation, the platform issued a RUR 1 mio ($15.2K) worth of loans, of which RUR 800K was not returned. However, as statistics accumulated, its scoring system began to work better and now the level of defaults is kept at a range of 14-16%, which roughly corresponds to average market statistics.
The next automatic component includes bots that can be used for several purposes. The first role is to negotiate a loan with a potential customer. Also, phone-calling bots can perform the role of a debt collector. Over the first week of trial, the collector robot carried out 6,000 phone calls that brought back more than RUR 500K ($7.6K). Almost 25% of the clients immediately repaid the debt while 50% said they would pay as soon as possible.
Using multiple channels is the most important development vector for modern platforms, regardless of the industry. In Webbankir’s case, messengers became a new channel for loan issuance. In the fall of 2017, Webbankir completely dropped its conventional 8-800 call center and switched to Telegram and Viber chat bots. Some 80% of its clients now use this communication channel.
The second solution is multiple services. As a rule, an online platform begins with selling one product or one service. But later it has to expand its product or service range in order to survive. Webbankir also gradually moves from a platform engaged in microloan engagement to a financial supermarket, offering insurance and legal services, payment of utility bills and fines payment, and credit rating services.
And finally, there is another solution, though not universal and available not on all platforms: a network of partners that integrate platform services into their business. Be it an online store, a small company, a car repair shop or beauty parlor, any of them can become a partner of the Webbankir Pay platform. Until recently, such firms in Russia did not have access to POS lending because banks were not interested in them because of their small turnover. At the moment, over 200 partners have joined the platform.
Plans call for integrating the face and passport data recognition technologies that will help clients reduce the time they spend on filling questionnaires, lower the risks and speed up the entire process. Do such solutions pay off? In any case, the innovative development increases the portfolio by 10%-15% per month. In 2018, Webbankir issued loans worth RUR 5.4 bln ($82 mio), which is 2.7 times more than in 2017. The number of active clients doubled and reached 500,000. What is most important, here we are witnessing a social aspect of high technology: some 40% of the platform clients live in rural areas and in small cities with a population of less than 50,000. Financial infrastructure is undeveloped there, and the online service is just about the only alternative to borrowing money from friends and neighbors.
The story of the Webbankir financial platform shows that financial technologies in Russia develop first of all beyond banks, especially when it comes to loans. Such a platform is an example of how the advantages of contemporary information technology can be integrated into credit activities.
By Konstantin Frumkin