Fintech Credi to fill $1.65 billion “bank of mum and dad” hole
The fintech company wants to formalise this surprisingly large but informal lending market in Australia.
New fintech company Credi is showing that the "bank of mum and dad" extends far beyond helping young people to get onto the property ladder. Since its launch last month, the company, which facilitates loan agreements between family and friends, has documented over $2 million worth of loans, with $3 million pending.
Research carried out for the company by RMIT shows that the Australian public lends in excess of $1.65 billion worth of unprotected, informal loans each year. CEO of Credi Tim Dean says that the company is looking to save relationships from the "strain of financial dealings" by turning these informal loan agreements into ones that are credible and manageable.
"In the past people either did nothing to formalise their agreements, which is fraught with risk, or emailed and called to communicate their wishes, leading to misunderstandings and confusion," he said.
"Credi does all of this and much more in one place, seamlessly. Two parties can set up, negotiate and agree on a contract in minutes."
Credi launched in April 2017 following a two-tier build phase as a loan management platform and has documented $2 million in loans since that time. While that's a large number, Dean says it's still early days.
"The loans we are seeing broadly mirror our research, from a $650,000 loan between family members to upscale a residence, to loans for cars, holidays, laptops, Apple watches and even to fund a startup!"
The platform is currently designed for individuals but there are plans to release a partner version for finance professionals such as accountants, bookkeepers and financial planners in the coming weeks.