IDEAL of Indonesia makes applying for mortgages less painful

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IDEAL of Indonesia

Mortgage applications can involve a lengthy and disjointed procedure that calls for mountains of manual paperwork. With a portal that enables consumers to compare mortgage products and apply for them from several banks at once, Jakarta-based IDEAL streamlines the procedure. The startup revealed today that it has secured $3.8 million in pre-seed funding, including participation from Living Lab Ventures, Ciputra Group, and AC Venture.

The money will go into expanding the business, hiring more people, and developing new goods. In the future, IDEAL intends to increase its lending portfolio and enter other Southeast Asian nations.

IDEAL was founded by Albert Surjaudaja, Ian Daniel Santoso, and Indira Nur Shadrina last year. This year, Jeganathan Sethu has joined the team. Surjaudaja was the former chief of operations strategy for the online payment company OVO before starting IDEAL.
According to Surjaudaja, IDEAL was founded “with the notion that consumer credit in Indonesia is broken,” according to TechCrunch.

“Credit, when used appropriately, plays a critical role in fostering economies’ expansion. It creates value through a multiplication effect, he continued. In light of this, Indonesia has one of the lowest credit to GDP ratios in the area, indicating that there is a significant amount of untapped economic value. There are several causes behind this, but one of the main ones is the lack of reliable, easily accessible loan product options.
According to Surjaudaja, traditional retail banks’ consumer lending products have a poor digital user experience, which limits their accessibility. The P2P lending and BNPL firms are on the other end of the spectrum, but their offerings are focused on smaller, more consumptive loans.

According to him, the market is clearly lacking traditional, effective, and larger-ticket size consumer loan options offered on an approachable digital platform.

According to Surjaudaja, traditional retail banks’ consumer lending products have a poor digital user experience, which limits their accessibility. The P2P lending and BNPL firms are on the other end of the spectrum, but their offerings are focused on smaller, more consumptive loans.https://softech82.com/2022/07/22/mexico-offers-tesla/

According to him, the market is clearly lacking traditional, effective, and larger-ticket size consumer loan options offered on an approachable digital platform.

According to Surjaudaja, IDEAL chose mortgages as its first consumer lending product because of the size of the market for such loans. She bases this claim on research from Bank Indonesia from 2021, which estimates that the country’s mortgage market is worth $39 billion and is expected to grow at a 17 percent CAGR over the following five years. The main demographic in the house ownership market is expected to be Gen Z and Gen Y.

The lowest in Southeast Asia, Indonesia’s mortgage penetration rate is only 3% of the national GDP.

The typical mortgage procedure, according to Surjaudaja, is incredibly labor-intensive for customers, very fragmented, and manual.
For instance, the mortgage application process is complicated since the majority of individuals don’t understand how it works. Additionally, there are many parties participating in the manual, non-standardized document submission process, and documents containing sensitive information are handled without security. According to Surjaudaja, consumers struggle with a lack of clarity in pricing and the availability of many options, as well as a convoluted application process that forces them to get in touch with their agent frequently.

The goal of IDEAL’s digital platform is to address these issues. While real estate brokers currently tend to recommend mortgages, IDEAL allows purchasers to choose their own financing products. Additionally, it offers a function called IDEAL Checking that enables quick credit checks for users.
It also contains a direct application system that enables users to apply to numerous banks with one piece of data, a real-time tracking system, and a cost and instalment calculator that assists customers in choosing a mortgage. According to IDEAL, its digital method is secure and reduces human mistake and data leaks that frequently happen during mortgage processes conducted on paper or using messaging apps.

IDEAL Compass, a quick questionnaire that aids the platform in understanding the needs of a user and generates a simulation of monthly payments, tenor, and other information about a mortgage, as well as detailed information about property units provided by IDEAL’s developer partners are additional features.
Although the startup’s initial marketing efforts are concentrated on main housing, it has expansion plans for secondary housing and mortgage refinancing/takeover solutions. Additionally, a dashboard that assists consumers in managing and monitoring their mortgages will be introduced. With a long-term goal of expanding into more Southeast Asian markets like Thailand, the Philippines, and Vietnam, IDEAL also intends to diversify into other significant lending products.

According to Surjaudaja, 60 to 70 percent of Indonesia’s mortgage industry is for secondary houses. Since the difference between fixed and floating mortgage interest rates in Indonesia can be quite significant—up to a 10 percent difference—our market research indicates that there is a significant need and demand from Indonesian consumers for a way to easily take over or refinance their current mortgage.
IDEAL earns revenue by charging banks and real estate developers a commission for each loan application that is approved through the platform. Five banks, including CIMB Niaga, OCBC NISP, and Maybank, as well as some of Indonesia’s leading real estate developers, including Sinar Mas Land, Ciputra Group, and Agung Sedayu Group, are presently partners with it. Its technology uses APIs to connect to banks, which streamlines the data collection process.
IDEAL’s rivals include Pinhome, Cermati, and Cekaja, among others. According to Surjaudaja, Pinhome’s business model is more property-centric, offering a complete property solution from home search through house finance. He contrasts this by saying that IDEAL’s business strategy is “customer focused” and leans more toward fintech than proptech. While Surjaudaja argued that Cermati and Cekaja are not fully digital, do not provide contextual data, and still require an online-to-offline process, without a credit scoring pre-check and without pre-filtering applicants to banks, they do allow users to browse mortgage products from multiple banks.

According to a prepared statement by AC Ventures managing partner Adrian Li, 3 percent of the local GDP in Indonesia is currently covered by mortgages. In comparison to Malaysia and Singapore, which have rates of 30% or greater, that is low. If Indonesia can increase financial access and double its mortgage penetration to 6%, there is a US$30 billion opportunity. In order to create a one-stop shop for mortgages in Indonesia, IDEAL’s well-suited team recognised a bottleneck in the mortgage sector and provided domain experience in fintech and real estate.

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