85% of folks have bank accounts, but only about 20% of them actually use the bank (for borrowing). They rely on other forums to meet their financing needs. These guys don't have access to credit.

As a startup, when we launched back in 2018, the lending market in Sri Lanka was $5 billion - and what we understood this from this 5 billion requirement, almost 40% relied on loan sharks and individuals who have very dubious practices of charging excessive interest rates, as well as very unpleasant collection methods.

And coming from a tech and a finance background, we realised there might be a potential for us to provide credit underwriting through a blockchain solution.

How do we let brands get in front of first party data customers with the highest intent the world has ever seen? I mean, our click to sales ratio is 55%.

Brands are paying billions in marketing budgets, so that you can see the advert you then clicking the advert getting to their site or going to their store pulling your credit card out and paying billions in interest and fees to credit card companies to buy the products.

What we've done is we've sort of said, why don't we circumvent the middleman? Why don't we let brands rather pay our customers? In other words, use the brand's marketing budget to subsidise the cost of credit to our customer, and convince our customer to buy from that brand.

The whole equation makes more sense. The customer has more sustainable buying power, because the brand is subsidising the cost of credit to the customer. So the brand can make a sale.

And then the credit scoring engine started taking shape. And over, you know, Covid, after Covid, we started bringing defaults down from 50 to 40, 40 to 30, 30 to 20, 20 to 15. And then, you know, the tougher bit came because it was not only about the credit scoring, it had to be a lot of engineering, then it's about the experience of the consumer, how is the product structured, you know, the first interaction of the consumer with the company till after he or she has repaid, everything matters. How the lead generation happened, how is the customer support interacting with the customer, or what has been experienced in app, what is experienced at the point of repayment, you know.

We've seen many times if the customer faces challenges in repaying whether or not it was our issue or an issue at the wallet side, the customers could turn rogue.

There was so much to it that we learned over time. And you know, when we actually closed our lending book pre-acquisition, the latest cohort actually close it under three per cent default

And I actually want to take a step back here, if you don't mind, and just make a few remarks about people in Alif overall, about about our efforts in combining technology and education. I don't know if you if you knew this, but the average age of our employees is 25. We have a lot of students, recent graduates. We train them ourselves. So to give an example of specific training, IT skills is an area where we felt that we could contribute to the education system in Tajikistan. So we established Alif Academy in 2017, as a nonprofit where we promote it education. So we provide free programming courses, including special courses for girls, for kids, for Afghan refugees.

So far, we've had more than 2,000 graduates of these courses, and some of them working, at least some of them work in other companies. And hopefully now in the new countries we had, and we have the privilege of being able to attract some of the most bright, kind, noble, energetic individuals throughout all these years, we had more than 50,000 applications to to our vacancies. And we've chosen and retained the very best.

It's a good point that you make because I think that that's a very key differentiation. Alternatives will make money by consumers not paying, we make money by consumers payng us back. It's about using it in the correct fashion -customer defaulting, right, we're not making interest, we're not compounding that interest. So for us, it is ensuring that the customer remains within their spending limit, budgeting properly and using the platform in a responsible manner. In that way, our our vision and what's what's healthy for the consumer is very much in line.

And remember, the consumer is not our customer, the merchant partner is our customer. And if you love a brand, and you buy from them two or three times a year with PayJustNow we may be empowering you to buy more of that product, or more often. I think back to our very first merchant partner -they had no reason to, but they gave us a chance. They're called Freedom of Movement known by the acronym FOM. And they at the time probably had about 20 products, they were above average value, they were durable, they were aspirational, was high quality, and at that time in 2019, the last relaxed memory that we have was the World Cup in 2019. You know, they traded off the popularity of what was their most iconic product and that was the FOM x Kolisi. It was veldskoen shoes, which they made in collaboration with the Springbok captain Siya Kolisi, in the same year that he took our nation's dreams and team to Japan and inspired us all with that scintillating campaign that gave South Africa yet another Rugby World Cup title.

So I think along the way, partnering with merchants, storied merchants that have a following was quite an important thing to get right from the beginning. And then we needed to overlay that with consistent, predictable, transparent service to the consumer that could build trust.

So, about the history... actually, Russian retail lending is relatively young, it started less than 20 years ago and it made a huge jump from where we were - just basic stuff 15 years ago - to the state that we have now.

There's a positive outcome of this short history, we don't have much of the legacy technologies, etc, that some of a large international group experience that, take core banking systems, they don't have something that was developed 50 years ago, they're in a more or less modern state.

Another indicator that is significant is that BNPL meant around 3% to 4% of the total e-commerce sales in Spain, while in Sweden it is around 20%. So we see significant growth expectations for the years to come.

Then also remember that if I'm a merchant and my aim is to maximise my sales, and suddenly I have to talk to five different lenders, or negotiate with them, I may not have the skills nor the time, to do it. Well, we do that for you. So you just have to focus on what you best know, which is selling through your, your webpage, and we take care of the rest.

"The risk of giving into temptation is as old as humanity. But there are reasons to think that people today are having to work harder to resist it, particularly when it comes to consumer behaviour. Digital technology has made it easier and faster to buy goods and services in an instant, without the delays of processing that once comprised an inbuilt cooling off period". This might sound like a headline from today's papers, but in fact it was from an article in The Financial Times published seven years ago, almost to the day - at a time when Klarna was around, yes, but only just beginning its global expansion, Affirm was only two years old, and AfterPay only a few months old. Welcome back to How to Lend Money to Strangers, the podcast about consumer lending strategies across the credit lifecycle and around the world.

We are always on the lookout for new data sources, or external providers, and whenever we see something that's interesting, we test it… In the end, it comes down to what can we pay per gini point of lift?