ID Finance, the emerging markets fintech company, has reported 82% revenue growth for the first half of 2017 following successful expansion into the Brazilian online lending market. The data science, credit scoring and digital finance company has now processed over 1m loans and is planning further expansion in Latam with a launch expected in Mexico later this year.
ID Finance was founded in Russia in 2012 and has rapidly expanded into Kazakhstan, Georgia, Poland, Spain and Brazil. It uses both traditional and alternative sources of data to improve access to competitive financial services and helps customers build their credit profile over time in order to gain access to more financial products. The company reached profitability in 2015 and is now issuing over 60,000 loans each month with monthly revenue of $15m.
“We are very happy with our revenue growth as we continue to execute to plan. We are particularly excited by the huge potential for competitive and convenient online lending in Brazil – we’re seeing stronger growth and a higher return on marketing spend in Brazil than we’ve seen in any other market so far,” comments Boris Batine, co-founder and CEO at ID Finance.
Brazil is attracting considerable interest among fintech companies for several reasons. Firstly, the banking sector has a small number of players and competition is limited. Secondly, there are 61m people that are blacklisted from the traditional financial system. Thirdly, Brazil has the largest smartphone market by volume in Latam.
According to a recent report from Goldman Sachs, the top five banks in Brazil hold 84 per cent of total loans excluding development banks. Meanwhile in retail branch banking, the top five banks have 90 per cent of branches. By way of comparison, in the United States the top five banks hold just about 20 per cent of all branches. ID Finance partnered with Brazilian bank Socinal Financeria to overcome regulatory challenges and accelerate its launch.
“Our banking-as-a-service platform is proving highly effective. It allows us to focus on our core strengths of client capture and credit scoring, while Socinal Financeria takes on the back-office function and regulatory requirements,” comments Alexander Dunaev, Co-Founder and COO, ID Finance.
According to Goldman Sachs, Brazil has an estimated revenue pool of $24 billion for fintech companies over the next 10 years, with payments, lending and personal finance the most promising segments. The Latin American Private Equity and Venture Capital Association saw fintech companies in Brazil attract $113m in venture capital in 2016, more than 10 per cent higher than the $102m pledged in 2015 despite a broader decline in venture capital investment in Brazilian startups.
“ID Finance is one of the fastest-growing and fastest-moving online lenders globally. We have effectively built the digital infrastructure for online lending in six countries within just five years and we remain on track for our launch in Mexico this year,” continues Boris Batine, co-founder and CEO at ID Finance. “Our continued diversification across both geographies and products means we are confident in revenue growth and over 80 per cent of our revenue will be from outside of Russia by the end of 2019.”