And today, what we're seeing is we are able to serve as very simple institutions, we also able to serve financial institutions that are on the bleeding edge of financial services, what they refer to headless, so there's no branches, everything is online, and they're reaching their client base through mobile phones only. And their big need is about innovation and speed.

We've got a great foundation of what we built on by starting off, as we discussed, in Nigeria and the Philippines and so forth, but what we also see ourselves as managing to fill in the gap for a lot of forward looking institutions, those who are wanting to kind of leap frog and compete with fintechs, as well as fintechs themselves. How to deliver new services, how to take what over their clients are asking for and address it, both as a service as well as eventually going back into their products.

There's a great picture we have in the offices, although we're working in rural parts of Nigeria, there's a shot of our core banking system running in a Tesla.

The mobile wallets information I see, in a way, as a parallel option to Open Banking. It's really where somebody's having their financial transactions give us an indication of their income or their ability to spend, as well as some indication of the consistency of salary over time and the income. So I think what we've seen is combining that with the credit bureau data, you know, really provides a really strong indication of risk.

And we talked about the different data sources, some of the data sources we may not be holding within the the credit bureau, but what we're trying to do is actually facilitate so we can provide decision modules where we're bringing together that data that may be held by the telco or the bank in the mobile wallet and combining that with the credit bureau data so it's easier to use to generate those decisions for the lenders.

I had a conversation with the Mortgage Club yesterday and it's the same conversation. It's, you know, how do we make sure how do we bridge the gap between the innovation that we're bringing to the market versus what they know, and what their what their their fears could be based off of past products that have been a market. So really, it's it's right now. It's about communication. It's about patience. It's about empathy for us. And we want to make sure that we partner with these intermediaries because they provide the crucial advice to first time buyers who are vulnerable in this process. They've never bought a home before and the home buying process is to put it simply an absolute nightmare to go through. So a broker that can, you know, take a accurate financial snapshot for that customer, break down the process a bit for them, make them feel comfortable about them, you know, making the largest purchase their life is important for our customers. And that's why we want to make sure we partner with them.

But from our side of things, I think the main thing that we're seeing is however clever you want to be about it, however many propensity scores you want to use, however you want to segment your own collections portfolio and look to engage with people, if you're not able to contact that customer, it's going to be very difficult to get a good outcome for either you or for the customer themselves.

So because of those front-end online application journeys that we're capturing data from, and because of the recency - we're updating our full database - we already have a significant coverage of UK contact channel information, which we're able to help financial services firms get access to and to engage with their consumer, so they actually can get that conversation started. And they can try and get that resolution for them. But then if they if they can't have that first conversation, the rest of the clever stuff that they can do kind of goes out the window a little bit.

High level, I would say there are four elements of the lending process, and we started with one: which was how risky is it to lend Brendan a certain money? Like what's the likelihood of repayment or default, and then really allowing our lenders to specify, are they comfortable with that? How do they want to price it?

Increasingly, I think to the point you're making, we are also applying it to the second area we really focused on, how do I reduce friction in the process, right? We didn't start with this insight. This is kind of one of those you learn in the market. When we started, every borrower that our lenders were onboarding, we did a phone call, we asked for an ID to be uploaded to verify identity, that standard kind of KYC stuff that you do. And we had this insight, like, for the small loans, it costs too much money to get on the phone with people, maybe we could just use automated signals to do fraud prevention and not get on the phone, just for small loans, just for a few, to see what happens.

And so we tried it. And we saw this 2x to 3x increase in pull through and actually equal or positive credit performance. We went, 'oh, that's interesting, if I can take a certain amount of demand and turn it into twice as many loans, that's really valuable'. So we started the process of saying, can we use machine learning to get to a place where we're comfortable with more loans of larger sizes of longer durations that we can approve without that human intervention, because it both lowers the cost, but it reduces the friction.

And it turns out, consumers are not only rate sensitive on the loan side, they're also friction sensitive, they don't like putting in a lot of effort. So we are now at a place where our lenders see 70% of loans coming through the platform, having no touch origination - with ID verification, income verification done in automated ways, with very high NPS and very low cost and high conversions as a result of that.

So we can speak about Victoriabank, but first of all, it's important to understand the level of the banking system in the scale in in Moldova, because, as I mentioned, it is a small country - in terms of square meters and also in population - the GDP is around E11.5 billion, GDP per capita is E4,400, average salary is about E450 per month, with unemployment rate of 3.5% and the inflation rate, the official inflation rate, at this moment of time, it's around 22%. And to understand the banking system, it's 51% of the total GDP in Moldova. To understand the scale of that, Victoriabank in Romania alone, which is the biggest bank in Romania, is bigger than the combined banks in Moldova - but the competition is very tight and this affects the margins very, very dramatically.

There are 11 banks in Moldova, too many for this population.

Now coming back to Victoriabank, in 2018 Victoriabank was the third largest bank in Moldova. We are always proud of our history and about the innovation which were brought into Moldova by Victoriabank, since the moment it was established as a bank.

Mukesh Bubna 7:30

Sure. First of all, we've done a slight pivot and "led grow, borrow grow" we've changed that very recently, so it's not on our website, but we moved to "delivering financial happiness".

What does that mean? From an investor point of view, in India, the fixed deposit interest rates have plummeted in the last two years from 9% to 5%, while the inflation rate runs close to 6% officially (unofficially it runs much higher). And then there's a 35% tax on the interest income. So you can imagine anybody keeping money in a bank on a fixed deposit is losing money in India. So our proposition to them is risk adjusted yield - we should be able to give you 2x of fixed deposits. And that's happens, right? Your money is growing. And that's a good thing to happen for you.

We tell our consumers to diversify across at least 100 borrowers. Now, that gives them a comfort of ability to absorb any shock from delayed payment or delinquencies.

Second is that we also have certain innovation, what we have launched also is a monthly income plan. So if somebody brought somewhere around 5 million Indian rupees on our platform, we are able to give them an income of 50,000 rupees a month, which goes back to their account for their own need, whether they want to shop they will travel, whatever they feel like. No, it is not 50,000 like a fixed deposit system. It's an arrangement giving you a ballpark on our app. Investors can start investing in less than two minutes, and can fun transfer 24 by 7, I don't have any human intervention required anymore for any investor, individual institution to on board themselves.

Now on the show, we love a credit score and the Thai credit bureau score is one that I'm obviosuly very fond of, having helped roll it out initially a few years ago. But for those that are unfamiliar with the market, who are maybe in the US or the UK, is that a score that's going to be very familiar to them? that looks and operates like a score in a big developed market?

Marco Chu 15:30

It would feel pretty much the same. I mean, it is still a credit score, it gives you a number that tells you how risky that particular consumer is. Nothing has really changed in that aspect. But in the back, there's a lot of changes, different countries have different credit markets, and each is a little bit unique in their own way. I mean, for example, in the US, you will have vast amount of auto loans, because you need to have a car in the States versus in Singapore or Hong Kong where not everyone will have a car.

And so is Thailand, right? Thailand is, I would, say credit under-served. But considering the size of the adult population, and among people that actually have a credit history, you can expect that a lot of them don't have conventional consumer lending products we would imagine in developed countries. One thing that's very interesting that they have, and we recently included in the score is, agriculture loans. Thailand have a good part of the GDP in agriculture, and farming loans work differently compared to most consumer loans. And we simply need to add that to serve our credit inclusion mission.

When people look at your website, they're going to see the line "we provide repayable finance to help social enterprises" and for most of us, the first time we read that line, it's going to stick a little bit and people might be thinking why "repayable"? Why are you lending money to these charities, isn't it nicer to give a donation that doesn't have any strings attached?

Yeah, so lending has a few advantages over grant-giving in certain situations. What we're trying to do is to help organisations become better at doing what they do, becoming more efficient, so that either they can do things they weren't able to do before, or they can do them more efficiently - because they've been able to build some infrastructure, or expand into a new area, or possibly set up some trading activity which generates income, if that's what they're looking to achieve.

We try and fill a gap. It's very difficult to raise grant funding for anything that isn't directly related to a charity programme. Anything that has the word 'admin' in it is the anathema to many philanthropists. And that's where we come in, because we believe that a well run organisation needs opex, it needs capex.

And slowly and slowly, I think I always had that entrepreneur bug in me and that's what kept pushing me towards fintechs. And I think Revolut really put the gas on the fire and said, go and do it. Because you're surrounded by so highly aspirational people. So the story is still the same, which is I want to help people who want to build their credit, not just in the UK, but in any country.

And validation came actually at Revolut as well. When I was head of lending for both UK the US and I was scratching my head, trying to join up the data from the UK in the US. I met the bureaus, which you are from - not TransUnion, but one of the bureaus - and I tried to force them into a single contract. Why doesn't the credit bureau in the US speak to the credit bureau in the UK and give me a single contract, because it's the same consumer?

They wouldn't. They would like to sulking sisters, they don't want to see eye to eye.

So even if that exists, it's very hard to get women to complain. And often the complaint process puts the person that complains, the woman, in the limelight, or investigates the complaint in an insensitive way. And so there is, you know, there is all incentive to stay quiet and just stop using the service. And that's a problem, because what we need to see is actually greater use of the service. And that then leading to better life outcomes in some way.

So there's a lot that needs to be done by policymakers and regulators in creating easier complaint processes to check if the information that's being asked for by lenders is necessary and proportionate to the services that they provide. So does the lending app really need access to my phone messages or phone gallery or call records? And if you are accessing that information, then how you're going to use it, which then leads us to think about data rights. So there's a lot that needs to be done, you know, in unpacking, what does the safe and secure online environment mean? And how do we create that?

So yeah, to kind of summarise our mission: we want to improve the credit health of millions of people by building the world's best credit builder.

And so how do we do that? We want to make sure people are on the proper path to good credit, which is our tagline. And I think when we started talking to customers, and first of all our customer base tend to be quite tech-savvy Millennial or older Gen Z. And when you chat to them, many of their parents have gone through the 2008 financial crisis and credit crunch. And from that very traumatic experience, those parents have educated their kids to say, 'don't trust credit cards' or 'be wary of any form of interest-bearing products'. And it's very endemic in the mentality of that generation. I think it's 50% of this segment of the population don't trust credit cards.

So that's a really interesting insight. And what we wanted to do was then think about, well, people still want mortgages, right? Our customers still have long term financial aspirations, what can we do to design a product that feels fair.

Well, yes, we've got very many stories. We've got a woman who is physically challenged and is unable to move around and she started a small food business. And for one reason or another was never never able to get credit from a bank or any other financial institution - because they deem her as a high risk. And we stepped in to support her with a micro loan. And now she's grown her business 300% Very, very powerful testimony, which is on video, and a very excited woman.

Indeed, we have several people just to mention, one lady also had a cow, and was giving her 1 litre of milk, and we convinced her to sell it. And she topped up that money for us to finance and get her cow. And now she enjoys 17 litres of milk every day. Now, the beauty of this is immediately after the cow calved down, it was again pregnant within two months. And so I think in the next three months, she would again be enjoying a second calf from the original cow that we helped her to get.

And this was in an effort to try and control each of our debt. And it's the only time in all my years working with the credit card data that I've seen the number of decreases actually being higher than the number of increases. But with the initial rise at the beginning, we saw similar trends in the 2008 recession as well. And the average credit line during the pandemic peaked in June 2020, and then sharply decreased in around the vember of that year.

Since that point, though, it's been steadily increasing, and it's now in January stands at £5,450. And the average credit line is now actually higher than it was pre-pandemic levels. So, you know, it's business as usual. Now, when it comes to limit management programmes, so with the right strategies in place, there should actually be fewer accounts needing or being allowed to go over limit in the first place, we saw a similar picture in the US with limits reducing, so they reduced through most of 2020 as well, when the issues put them in, they increase programmes on hold, although now it's not quite as high as it was pre pandemic, the average limit isn't far off now in the US. So it's standing at $7,789, if we look at January figures,

It's interesting, you're kind of tying the stories together between India and Canada. But yeah, a lot of these alternative lenders don't have distribution, right? They have good products, but it's very hard for them to access new traffic, and they can get new traffic but a lot of that traffic may be absolutely terrible quality. So by partnering with us, we're able to drive traffic to them that's meaningful, you know, we do a lot of the pre qualification. So we cover off costs of credit pulls and things like that. And by the time we send it to them, you know, the goal is to have about an 80% chance of them converting with that lender.

So their cost of underwriting is lower, they're getting the lead flow that they want to get. And it's efficient, right? They don't need to do any marketing, their cost of acquisition is predictable. They pay us a per-funded fee. So again, predictable, you don't have to pay per lead. But yeah, they want a distribution. And we could provide the distribution.

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.

Convenience being such a huge motivator means that we don't need in my view to educate people on what open banking is, we just need to provide the reasons the benefits, especially around convenience, that get people to connect their bank account. And as you said, it is safer sharing that data through a secure channel as a regulated business like like us than, you know, photocopying or printing out your bank statements and then sending them into the post to some unknown place.

And these are all topics that have been talked about for a long time. But it is great to see the use cases start to develop the market start to mature, our understanding of these topics really starts to develop the fact that we don't need to educate consumers on what open banking is we just need to provide them a reason to call to action that makes sense. And if we do that, they get where they need. The business gets what they need. The regulators are happy because there's more richer data to personalise and, and really provide that responsible approach to to those lending situations and, and we just get on with their life. It's exciting.

So we had a different business model, we said, 'look, this is what we do. These are all the systems we do'. Now, you might be an individual at home, and you might have an apartment, and you're renting it out via Airbnb, or some other platform. So you want to do a check on your new tenant, to make sure that this person is of good standing, what system will you use? Because you're not going to be paying for 25,000 checks a month, it doesn't make sense.

So we went with a pay per use system where you can come in first verify that you are an individual, which we can work with. But once that is okay, then you can use our platform to do your individual checks yourself. For your own business purposes, let's say a customised KYC roadmap. So you can come in the system and you say, 'the checks I want to do are: an individual or first name, last name, date of birth, blah, blah, blah. So these are the compulsory ones, because without it, we can't give you a good result, and over and above I would also like a selfie with a handwritten note so that I know that it is relevant, and a video saying, "I would like to use your product", for example. So you select those, it creates a customised KYC journey for you, you can white label it, put on your logo, or your name or your product. So a person knows that he's doing this KYC for you. And then he will also get access to a portal where he can come in and see the data that he submitted in retrospect.

Open banking essentially is allowing fintech companies to offer innovative products and services on top of the traditional banks. In many countries, the legislation has pushed open banking, and an example of this is the European Union where PSD2 is forcing banks to expose certain API's to fintechs that have the appropriate licence.

However, we seen this trend not only in Europe, but globally. Because of open banking, we're seeing the platformication in banking, which is similar to the one we witnessed in the lodging sector (with Airbnb), Booking.com, Expedia, etc. Consumers and businesses utilise the best products according to their needs from different banks, and they interact with them through FinTech companies that are offering a much better user experience. Some examples of fintech companies that are using open banking are companies offering account aggregation; personal and business finance management; payment initiation; buy now pay later solutions; and credit scoring applications.

Just to quickly add onto the innovation. So I spoke about data and it's big for us, but the system and the technology side is equally as big, if not bigger. We've insourced our loans management system, which was a big challenge, but a very good decision for us. We centralise the cost between the different operating entities, which certainly takes away some of the pain and we've made a lot of effort to integrate directly into the large mobile network operators that are across Africa (MTN, Airtel, and SafariCom) to be able to do realtime integrated mobile money, collections and payments. That gives our clients massive convenience.

So even though we have a new client requirements to present yourself to a branch and to enrol your fingerprints and take your photo, once new clients are enrolled, the majority of people actually transact subsequently through a USSD interaction that's fully integrated with mobile money. Cashless, paperless contactless. So you could sort of see the theme here of traditional start, and then very quickly move people into an online and tech interface and a channel with limits growing and prices coming down.