According to the CEO of Freedom Finance Holding Timur Turlov, a new algorithm developed by the company can automatically decide whether or not an applicant is eligible to get a loan. Developing this new business direction is a task for newly created Freedom Finance Credit Microfinance Organization LLP, Turlov said at a briefing with the press.
As the Freedom Finance executive noted, this new algorithm allows the company to check borrowers with no loss in time.
«As we already know from our work, so-called human factor and delaying a final decision on loans can increase subjectivity and make business riskier. Therefore, an effective algorithm with no human impact can be much more productive,» he said.
Because the application review process now is smooth and solidly drawn, Freedom Finance Credit can cover as many clients as possible, including self-employed.
«There is a lot of people in Kazakhstan who are entrepreneurs or self-employed. They are not active participants of the pension system; however, they are the most active workforce and we want to provide financial services for these people as well,» Turlov stated.
As he noted, Freedom Finance Credit is a part of holding’s ecosystem.
«We have a loan portfolio, which we’ve been working on. We can sell it to the bank (Bank Freedom Finance), then securitize it and sell on an exchange. These processes are attached; we just look for the best way we can get our client,» the company’s head noted.
How does it work
The whole process from filing the application and document signing is online. All you need are an ID and a mobile phone. The reviewing process is so fast that the client can get the decision in four seconds thanks to smoothly operating business processes and a sophisticated scoring system.
«Our system is integrated with all government and non-government databases (20 in total). Of course, these bases have been updating all the time as we add new features,» said Aidos Zhumagulov, adviser of the board of Bank Freedom Finance Kazakhstan.
Moreover, the IT platform of Freedom Finance Credit can regulate how many applications can be approved.
«Our new IT platform has some tools to calibrate any system parameters we want. This is very important because we have a clear understanding of what rate of risk our partners have and what rate of approval we hate to use for each of them,» he said.
All information collected by the system goes through a so-called decision-making tree to clarify each parameter of a borrower including risks associated with a product, what the borrower wants to buy, and an average income in a specific region and industry. After that, all loan applications with a certain level of risk should be sent to different baskets with specific financial products and loan terms.
«Why do we use a decision-making tree? To offer our client a specific product based on a certain level of risk associated with him. We need this to make our offer as personalized as possible. This might be a loan or installment, big or small credit. As a result, each client can get a loan based on his rate of risks, behavior, and profiling,» Zhumagulov said.
If the loan is approved, the company will accompany the client through the entire process by informing him about payment dates and financial discipline.
In case of cancellation, the company will send a client a detailed explanation and even help to fix the problem. Thus, Freedom Finance Credit is aimed at becoming the first financial organization that clarifies the reason for loan cancellation, he explained.
The Honest Product
Currently, Freedom Finance Credit finances installment payment options without interest in such products as legal liability insurance by Freedom Finance Insurance, air ticket on installments on Aviata and Chocotravel websites and installments in Technodom. The company is planning to expand this list of partners.
«We believe in a simple rule: our finance products with installments should be honest with no hidden fee,» underlined Zhumagulov.
According to Timur Turlov, the installment payment options with no interest is a flagship product of the company and it is leading in terms of money.
«We make money on fee from shops. Our clients do not pay any fees and this is an absolutely honest product. We work with our partners on different conditions. Usually, the fee is about 20% for shop and 0% for client. Currently, the maximum amount of such a loan is one million tenge ($2,309). However, we cover almost 90% of all installments in Technodom in terms of the purchase sum,» he said.
