Jacaranda Finance moves from small loans into big data
The fintech startup is looking to approve borrowers that other lenders are missing.
Short-term loans provider Jacaranda Finance has announced its launch into big data underwriting as well as an expansion of its lending portfolio. The fintech startup said this signals a transition from being a small loans provider to a diversified consumer lending fintech.
"Traditional lending systems use very few data points to make credit decisions," said the director of Jacaranda, Daniel Wessels.
"The Jacaranda platform is an end-to-end underwriting platform that encompasses machine learning and thousands of data points, making the best use of economies of scale. We have always planned to use technology to revolutionise the way finance is delivered to the consumer and their response has been phenomenal."
The lender plans to use its new in-house technology platform, which automates loan application approvals, to approve borrowers other lenders are missing. It will also expand its loan offerings to include a Medium Amount Credit Contract (MACC) as a $4,600 Secured Loan.
MACCs are regulated differently under Australian Securities and Investment Commission (ASIC) rules than their smaller Small Amount Credit Contract (SACC) counterparts. Lenders are able to charge a maximum $400 establishment fee and a 48% p.a. rate with a MACC as opposed to a 20% establishment fee and 4% monthly fee on a SACC.
This move by Jacaranda to expand its loan portfolio follows the recent trend of short-term lenders offering larger loan amounts, the latest being Cash Converters.
However, Wessels said it was always one of the company's aims to venture into different market segments.
"The Small Amount Credit Contract (SACC) sector has become harder and harder to operate in. The attention of the regulator has resulted in some big name lenders slashing their workforce or exiting the market altogether. We can no longer rely solely on one product.”
“The extension of our product offering to include a Secured MACC product was just one component of a varied, long-term strategy to transform the consumer lending environment in a number of sectors in Australia through the use of fintech.”