RapiCredit is the first loan originator from South America on our P2P investment platform Bondster.com. The company is from Colombia, employs 81 people, and it has already issued over 600 thousand loans, with 270 thousand last year. It is a FinTech company which issues short-term loans for private persons, solely through an online platform. Approximately 80% of all applications are sent in by a mobile phone; the rest through a pc or laptop.
The Colombians’ approach to cashless payments has also changed a lot recently. Colombia has 50 million inhabitants, 30 million of whom are adults. Only 9 million of them own a credit card, but almost 90% of the active population has a bank account (there are 75 million bank accounts in the country). Fifteen million bank accounts have been opened online over the last two years, and it is expected that more and more financial services will be moving online, which is one of the reasons why there are so many FinTech start-ups in this Latin American country. Out of the 700 located in South America, almost 200 are in Colombia, which makes it one of the most important FinTech countries in the area.
The Majority of RapiCredit’s clients are aged between 25-45, with 43% of them being women and 57% men. Their income is usually one to three times the minimum wage, which means between 250-750 US dollars. More than half of the company’s clients (56%) come either from Bogota or Medellin.
In the nearest future, RapiCredit is planning to start offering short-term loans with maturity between 2-6 months. The Colombian company is quickly growing, and for that, it also needs financing. That is why it is offering its loans to investors on Bondster.com with a 15% interest.
Below, you can read an interview with the company’s CEO Daniel Materon.
You are a first loan originator on BONDSTER Marketplace from South America. How was the cooperation set up?
Cooperation setup with BONDSTER has been a very good experience. We have been thoroughly examined, communication has been clear and fluent, questions back and forth have worked properly and we feel they appreciate and value our business and effort. Very professionals.
What are the specifics of loan industry in Colombia?
Lending companies like RapiCredit, reconfigure the financial services industry in Colombia and therefore contribute to reducing the gap between those who have access to credit and those who do not. Although there are still elements that slow down or hinder the emergence of online lending organizations, such as transaction costs (dispersion and collection) and the cost of credit reports in both credit bureaus; new sources of information like social security give additional datapoints to assess credit risk, thus contributing to the growth of our industry. Colombia has 50M people, of which adults are close to 30M. Only 9M adults have a credit card, but almost 90% of the active population has a bank account (75M accounts). 15M have been opened digitally in the last 2 years. Middle class population has been underserved by banks, only 30% have some time of loan. Many people end up using sharkloans instead. 78% of customers who have used sharkloans have not used this method again after taking a credit with RapiCredit. There are more than 15 lending companies similar to Rapicredit, but the two biggest players, including us, represent more than 80% of market. RapiCredit is one of the 703 young Fintech companies located in 15 of the 18 countries in Latin America. Brazil has the largest number of Fintech companies: 370; It is followed by Mexico with 300 and Colombia with over 200, becoming the third most important country in the Latin American industry but 1st on a per capita basis. Additionally, according to the study presented by the IDB and Finnovista, almost 90% of FinTech activity is concentrated in 5 Latin American countries in Latin America.
What is the structure of your clients?
We target middle class adults, employed or self-employed that are reported as paying their social security (pensions and health). 70% of our clients are employed with a salary of 1,3X minimum salary. 65% are women. Online credit platforms have gained momentum, as 25% of people who have taken loans from banks claim to have applied for credit on these platforms; This percentage is 27% in people who had not applied for credit in banks before applying for a credit in RapiCredit.
What is your target group?
Middle class working adults, in the age group of 25-45 years who have a bank account. They can be considered “subprime” by banks. The addressable TAM is close to 20M adults.
What type of loans do you provide?
Currently we provide short term loans between €30 and €200 up to 30 days. Clients have the unilateral right to extend their loans up to 5 times, 30 days each. In the very near future we will be launching installment loans from 2 up to 6 months.
What people usually borrow money for?
I. To pay for an unexpected expense
II. To pay for family or child expenses
III. To pay your utility bills
What is your average interest rate on loans?
Interest rate in Rapicredit´s loans is 25% p.a. Adding up other fees, which are not compulsory, can be around 30% per month.
Is lending in Colombia subject to any regulations? Which ones?
Lending in Colombia is not a regulated activity but country do have a usury rate law in effect which fixes a cap for interest rates.
How many loans did you provide and what was the volume in 2019?
Company has provided a total of +620,000 loans, 277,000 just in 2019.
What do you expect from working with BONDSTER Marketplace?
We expect a long lasting relationship with BONDSTER and its investors, one that would be beneficial for all parties that will allow all to fulfill their/our needs and interests in the long run; that we can all grow and develop together. We are very excited and honored to be first BONDSTER´s ally in South America and we expect to be both very good "ambassadors" of them and also good representatives of our geographical region entrepreneurs and operators in your market.
Author: Jan Schönbauer, translation: Jan Koválik