Inspired by the success of digital banks like Revolut and N26 the team of ambitious professionals has contributed their own savings and capital to start Lion Lender.
The core team consists of professionals who have extensive experience in finance, IT, marketing, business development, data security and legal. They are coming from international banks, major local IT companies, fin-tech business, and digital marketplaces. Lion Lender is the first step to create a digital bank in Russia.
Their mission is to increase the financial literacy of the local population. Everyone should have easy and convenient access to financial services without borders – worldwide, and understand clearly all the benefits and risks of financial products.
The company was founded in 2018. Since then the team was working on IT-system, market research, product development, etc., and in 2019 the legal entity for operation business was established and sales were launched. Currently, the team consists of 28 professionals. The loan portfolio at the moment is EUR 2 million, with revenues of nearly 100 thousand euros.
“Lion Lender” is an unusual brand name for a company in Russia. The overwhelming majority of the MFIs brand names in Russia are connected to ‘cash’ or ‘money’. The team decided to use the European approach in running the business and branding. Moreover, the researchers discovered that potential clients are not sensitive to the company name in the short-term loans market. It’ s most important to have a good product and excellent marketing. Lion as a symbol of stability, confidence, and responsibility, which is important when working with money.
How it works?
The process of acquiring new clients is quite straight forward- the potential customer searches for short-term loans online and sees an ad on the web and then gets to Lion Lender’s website.
Then the client can choose the loan amount and the loan term they need. The repayment terms are visible straight away. If the client agrees with the terms, then he or she fills in the application form with the personal information for evaluation and scoring purposes. Lion Lender then uses its own CRM system with external integrations for running the scoring model.
The external databases like ‘Scorista’ service- the Russian Government Digital Services and credit bureau information is necessary to make a decision of the loan application approval. If the loan is approved, the client should sign the agreement using the digital signature and after that, the loan is granted in seconds to the client’s bank card or account. All the processes take less than 20 minutes for new clients and even less time for repeated clients.
The sophisticated IT system with an external scoring model allows approving loans only to responsible borrowers. Even repeated clients go through the scoring system again. The scoring model is quiet conservative and rejects more than 90% of new applications and over 15% of repeated applications. Lion Lender plans to maintain the balance between the high growth of their business and the loan portfolio quality in the future. However, when the loan defaults, Lion Lender uses licensed collection agencies to get the loan back and minimizes the losses. =
Currently, Lion Lender has nearly 10K clients. The target audience is people over 30 with family, who understands what they need money for, how much and for how long. They don’t apply for the maximum amount or for a maximum term which results in paying the loan back reliably and on time.
The typical customer is a family man/woman, 33 years old with average income around EUR 550, secondary or higher education, smartphone and internet users. The retention rate is over 50% now. In the future, they are planning to increase the returning customers base to 75%.
The average income of the customers is quite high and due to the chosen target audience, the default rate for Lion Lender is lower than the industry average of 15.6%. Moreover, the scoring system is doing its job by keeping the default rate of the borrowers low. The target is to maintain the default rate at the current level, as this is a driver for growth in their chosen growth strategy.
Currently, only one product is offered for investment- the short-term loans before the salary (under 30 days). The interest rate is regulated by the Central Bank of Russia, the loan rate is limited up to 1% per day (up to 365% p.a.). This is in line with the competition.
Currently, the team is working constantly to provide the opportunity to offer our clients extra services like money-transfer, P2P investments, long term loans with installment payments and mobile application.
The average loan for new clients is around EUR 140, and the average loan amount for repeat customers is EUR 210. The most frequent loan purposes are paying for bills or for family shopping.
Current situation and Future
The Russian market is quite competitive in micro-financing services, so it is very important to have a solid business model. The main competitors are the services that have the same 100% online model as Lion Lender and such young companies which entered the market recently and already achieved quite high brand awareness, for example, companies like PlanetaCash or EpicCash and ‘old dogs’ like Zaymer, Moneza, and Ezaem.
Local regulation is the main challenge in Russia. The Central Bank of Russia cut the interest rate from 1,5% per day to 1% per pay recently and issued new legislative initiatives that are good for clients but make the micro-financing business more complicated.
Due to Lion Lender’s main aim -building a digital bank in Russia they focus on the local business, but once it is achieved, they have long-term ambition plans to expand their business abroad.
Let’s welcome the new Loan Originator on Grupeer platform!