[INTERVIEW] Finda brings innovation to local loan markets

Finda's co-founders and CEOs Lee Hye-min, left, and Park Hong-min pose for a photo at the headquarters of Finda located in southern Seoul in late July. Courtesy of Finda

Loan platform firm broadens biz portfolio to better aid customers

By Anna J. Park

Since Finda, a platform offering a one-stop loan marketplace, was founded in 2015, the fintech company has been exponentially growing by attracting millions of users in the country. Over the past three years, Finda has grown by a whopping 65 times in terms of monthly revenue, and it has been keeping up with its goal to increase its revenue by three times this year compared to 2021.

Behind the impressive growth are two aspiring and ambitious startup veterans, co-founders and CEOs Lee Hye-min and Park Hong-min. The Korea Times recently sat down with them at the headquarters of Finda in southern Seoul to listen to their vivid business stories.

The two first met in the Silicon Valley in early 2015.

Back then, Lee was already a startup superstar in her early 30s, with three successful entrepreneurship experiences, including cosmetics subscription commerce Glossybox, baby products business Bebe & Co and global diet coaching service app Noom.

After successfully leading Noom's solid growth in Korea as CEO for two years, Lee stayed in the U.S. as an advisor at 500 Startups, a renowned venture capital firm. Her current business partner Park Hong-min was then a chief marketing officer at Spika (Sunshine), a file-sharing app startup, which was participating in 500 Startups' venture acceleration program. As the two interacted through the program, they realized they share a similar vision and passion for entrepreneurship, which led to the joint founding of Finda later that year.

From the onset, the two co-founders decided to focus on innovating loan processes through the fintech business. They figured that the tedious and convoluted loan procedures that a borrower must go through could be completely streamlined into a more transparent and speedy experience using their fintech service that would facilitate the condition of symmetric information for both borrowers and lenders, by offering detailed loan products available for each borrower.

Currently, Finda is a lending platform that offers more than 290 loan products from 62 banks and financial companies. Users can easily compare loan interest rates of hundreds of loan products by dozens of lenders at a single browse on the mobile app and choose the loan with the best rate for them. Since its foundation, the fintech firm has cumulatively approved 1,127 trillion won ($859 billion) worth of loans, as of early August.

Given that an interest rate disparity between the best rate and the worst rate products offered by numerous lenders nationwide normally exceeds over 10.1 percentage points, the firm's business model is revolutionary in that it offers borrowers the right to select their preferred lender, based on a direct interest rate comparison on the mobile app.

In addition, while the average loan approval rate at traditional banking channels stands at 18.4 percent, the average loan approval rate for Finda customers is 71.8 percent, according to the firm's data during January and April this year.

Weathering years of uncertainties with tenacity

Looking back, onlookers might think Finda's innovative loan platform app is a business model that guaranteed success from the start by filling and satisfying the existing needs of borrowers to gain convenient access to available loan products offered by many lenders.

However, that wasn't the case in the mid-2010s when the two co-founders started the business.

They had to weather years of uncertainties, as back then, customers' private financial information could not be shared among companies and it had to be kept strictly separate by each financial institution. That means Korea's financial regulatory framework didn't allow the two CEOs to realize their concrete vision of providing a comprehensive one-stop loan platform for people.

"Regulations play the most critical role in a fintech business. When we first started the company to solve the matter of information asymmetry in the loan markets, it was not allowed for us to receive customers' financial information from various lenders," Park said during the interview.

"As the business model that we devised was a one-stop comparison and recommendation platform of loan products, based on receiving financial information from a range of lenders, it was not possible to realize the business vision back then," he added.

Despite the regulatory difficulties, the two co-founders trudged on, focusing on just doing as much as possible within the boundaries of existing regulations. Instead of providing direct comparisons and recommendations of loan products for each customer as Finda does now, the fintech company aimed at offering on their website various loan products' information, despite the lack of cohesion. In the meantime, the company continued to knock on the doors of lenders nationwide, forming partnerships with them.

As fortune goes to those who are prepared, Finda managed to grab a critical opportunity in 2019, when the Financial Services Commission (FSC) ― the top financial regulator ― selected the firm for its first-ever sandbox program. The program allowed selected startups to explore their financial services outside of existing regulations during their test-pilot periods, aiming to foster innovation in the industry. Out of many companies selected to the deregulatory initiative that year, Finda is the only fintech firm that has been logging exponential growth so far.

"The key to the success was that we have been preparing for such an opportunity by expanding partnerships with local lenders three to four years in advance," Park explained. "Even though the regulatory framework back then did not allow Finda's ideal business model, we had a firm conviction that local regulations would be favorably changed for us in the end. Because we were sure that our business model would deliver huge benefits for customers, once regulations would allow it," he said.

Park added that although it was difficult then, without knowing when the timing would become ripe in terms of regulatory changes, they could endure the period of uncertainty because they were convinced of the firm's direction and vision.

Various awards for Finda's innovative fintech services, including a Minister of Science and ICT Award from 2019, are displayed at the company's headquarters located in southern Seoul. Courtesy of Finda

Since 2019, Finda has been rapidly growing, expanding the number of customers to over a million. While the firm's revenue grew by more than 65 times in the past three years, the fintech firm expects the speedy growth would continue in times of soaring interest rates.

When questioned whether their business model could stand firm when Korea's entire household debt logged the first-ever decrease in the first half this year, Lee and Park stressed that demand for Finda's services is actually increasing during the period of rising interest rates.

"When we first began the business, interest rates were decreasing, in contrast to the current move of increasing interest rates. Both periods are unfavorable on the part of borrowers due to growing uncertainties. Yet, in both cases, borrowers' need for replacing loan products for lower interest rate products is salient. As Finda provides alternative options available for customers' existing loan products, their demand for us is increasing in times of interest rate hikes as well," co-founder Lee Hye-min explained.

Park added that Finda's service could also help local lenders manage risks, as it helps borrowers to reasonably spread out their cash flow with Finda's loan management service.

Mission to aid customers' reasonable decision-making

Meanwhile, the two CEOs attribute their complementary leadership and mutual trust as being the key to the fintech firm's growth through thick and thin.

"It's quite easy to see the co-founders of a startup decide to go their separate ways, particularly during a so-called death-valley period," Lee said. "But we never thought of such an option, as we both are mature entrepreneurs with experience. It didn't occur to us that our mutual trust could be shaken, because we share a common vision and want to solve the same problem. We just focused on how to better solve the problem," she highlighted.

Co-founder Park added that the two have distinct strengths that complement each other. Based on their balanced and trust-based partnership, Finda is now expanding its services further.

The fintech company not only offers customer-tailored loan management programs, but it now renders automobile lease deals. Recently, the fintech company also acquired OpenUB, an AI-based solution provider of commercial district analysis.

"Finda recently acquired OpenUB, which has expertise in business district analysis. Finda and OpenUB have similar missions as well as comparable business strategies. Seeing many real-estate firms or developers purchase OpenUB's data for their strategies, we hope to share the information with retail customers as well," Lee explained, adding that the big data could help local small business owners make practical decisions.

"In the end, our mission is rendering liquidity management services that can facilitate more rational and reasonable decision-making by customers. In other words, we aim to solve the matter of markets' information asymmetry by innovative technology and services," she stressed.