A force to be reckoned with?

WBJ: Tell us in brief about Fintredo.

Paweł Zborowski: Fintredo is a Polish fintech firm. We have been active in the online lending industry since 2016. We have been growing since. Like in any fintech company, there are two main divisions. The first is technology. We focus on development as it helps us provide outstanding services. The second is the financial division that’s responsible for lending and building a profitable portfolio.

Fintredo has two brands – Credilo and Zylion. Why two? How are they different?

It’s about the segmentation of our customers. We noticed that Credilo, which is older than Zylion, was not addressing the needs of all customers that we had originally intended to reach. That’s why we launched the second brand. Credilo targets the older population. Zylion focuses on relatively younger people. There are more women in Credilo’s customer base. The dominant part of Zylion’s clientele is male. Therefore we have two compatible brands to reach, from a marketing perspective, a wider market. It isn’t so that one brand focuses only on women while the other targets men. If we look at the percentages, the differences are slight.

Segmentation. Is that another word for failure? The brands were launched two years apart? 

No, by segmentation, I mean the segmentation of potential customers. We were successful with the first brand. We thought about expansion in the most efficient way. It turned out that implementing another brand focusing on a slightly different part of the population would be effective.

How successful are these two brands? How do you define success?

Difficult question … How do you define success? Let’s put these considerations aside. We are successful. We have been on the market for more than three years now and in 2019 we doubled our total business. If we are able to double the business every year, to me that means that we are successful.

Can you give us some numbers when you say double?

First, you must know that within our industry it isn’t really common to share the numbers. Secondly, let me give you the numbers. At the end of 2019, we exceeded 300,000 registered customers for both brands. At the end of 2018, there were 141,000 of them. At the same time, the volume of loans increased by 183 percent and their number by 200 percent.

Tell us more about payday lending.

The online lending market is highly-regulated. On the one hand, we don’t have all regulatory and reporting requirements banks have. That’s why it's so difficult to compare competitors in our industry. But on the other hand, all the other areas are overregulated. Our market, by which I mean the non-banking financial sector, contains a lot of entities – up to 500 companies – in Poland as of today. And if you consider the volume of trade, these 500 firms are responsible for the issuance of, more or less, 10 percent of all consumer loans. That means we aren’t competing with banks. We are doing a different kind of business. Lending institutions provide loan access to customers for whom the banking offer is in many cases limited or unavailable. The clients of loan companies are often less prosperous, less attractive from the banks’ perspective. And banks often have no offer for them. We help to narrow this financial exclusion gap. If you consider the smallest loans in terms of amount, our [payday loan] industry has more than 50 percent market share. In the non-banking financial sector, there are many companies, but we believe that there is a huge scope to grow despite their number.

Where does Fintredo stand in this market?

Out of the 500 companies in our [nonbanking financial] sector, there are 70 doing more or less the same business as us. Within the 500, there are many small and totally incomparable businesses too, including pawn shops. It’s senseless to compare us to such [small] firms. We compare ourselves and compete with around 70 online lenders. And within this group of 70, we are in the top 15 in terms of traffic that we generate online. Other numbers are not provided so it is impossible to present any other ranking.

How do the Polish government’s policies affect you?

Consumers are protected because we operate in a highly regulated market. A regulation introduced in March 2016 decided how much interest we can charge on a loan. We aren’t able to charge customers more than the [interest rate] cap decided by the government so customers cannot be overcharged. Actually this regulation helped the industry by eliminating unfair practices.

What are your expansion plans?

As I mentioned before, we are growing relatively fast. We find the Polish market very promising and we still aim to improve our position here in Poland. At the same time, we have already started to plan our expansion into new markets. We hope that we will operate in two non-Polish markets by the end of 2021 and hope to enter the first market before the end of this year. I don’t want to reveal the names of countries yet. It isn’t a secret but it’s still in progress. I may only tell you that South America is one of the most interesting markets for us. Through a holding – Raisead – we are already operating on more than 20 markets in three continents, including Asia, Europe, and South America, with different products, not only financial. We do have a lot of experience in e-commerce worldwide.

What marketing techniques do you use to reach an average Joe?

Through the holding company Raisead, which employs efficient performance marketing techniques, we have a unique advantage. Because of it, we have access to specialists from social media marketing, email marketing, etc. That’s how we reach an average Joe.

What is the success rate of an online payday lender? Looking at how many online companies have shut down, how does your company plan to stay afloat?

We try to satisfy the needs of our customers. We aren’t trying to bring something totally new to the market. There are many people in Poland who are excluded by banks because of their type of work. There has to be an alternative for them. If our [payday loan] industry didn’t exist, they wouldn’t receive any financing. What makes firms successful in this market, is how they approach risk management. If your company is reasonable about granting loans, then you won’t have any problems while collecting debts. The most important thing that helps us to grow is effective risk management. Another success factor is the financing of the lending business. You need to have investors who believe in your business plans and finance accordingly.

How politically vulnerable is the payday lending industry?

I think we are just as vulnerable as other, heavily regulated industries. Everyone needs stability and predictable rules. They should not change too often. When we started our business we had new regulations in place, applicable from March 2016. Everybody in the industry believed that this was it. That there wouldn’t be any further amendments. But it turned out after one year that Poland’s governing party was willing to tighten its control over the industry even further. Of course, it may affect our business. We wish to know in advance what the regulations would look like so that we know what to expect. We can plan our business keeping the framework in mind. As an industry, we hope that the law would be clear and remain unchanged for a few years.

How can Fintredo improve?

There is always room for improvement. We plan to develop in the technology area by implementing tools using AI and machine learning. All that to improve the decision-making and scoring processes. These tools will be necessary to enter the new markets where we have little experience with customers. We believe that better technology helps pave the way for loss-minimization in a new market.

Have you faced any failures?

We had some failures. The biggest disappointment was that we weren’t able to convince our affiliate networks to trust us at the very beginning. It took months, or rather years, to build trust in this market. Every day brings successes and failures. What’s important is what you make of it, whether you learn and change your ways as a consequence.

More information on the company's website.