LO Spotlight: Interview with Aasa

Established in 2010, Aasa Group offers personal loans in Finland, Poland and Sweden. The group is one of the top three lenders on the Polish market and is in the top five lenders in Finland. Aasa is committed to responsible lending, innovation and diversity. The group recently signed the Diversity Charter, which promotes cultural, ethnic and social diversity in a work environment. In terms of operation size, Aasa is the largest loan originator on Mintos and currently offers loans for investment from Poland and Sweden. Joining Mintos is Meliina Räty, Chief Strategy Officer responsible for Aasa Group’s expansion to new markets including Aasa Kredit Svenska AB and Ovais Siddiqui, CEO of Aasa Polska to discuss the group’s future plans and also give further insight into Aasa to investors on Mintos.

Meliina Räty, Chief Strategy Officer
Ovais Siddiqui, CEO of Aasa Polska

Firstly, can you please tell us a little bit more about Aasa?

Meliina Räty, Chief Strategy Officer, Aasa Kredit Svenska AB: Aasa’s business model is well established and tested in different markets and we focus on speed as well as simple and transparent terms for our customers. With our fully automated lending platform and our knowledge of predictive analytics and processes, we can offer financial support and assistance where banks are not fast or flexible enough.

Ovais Siddiqui, CEO of Aasa Polska: I would also like to add that the core of our business is responsibility. At Aasa we are committed to ensuring transparency, speed, simplicity and the safety of our business model. It is essential for us to provide professional financial support and assistance to our clients and benefits to our investors. We do this whilst maintaining the highest ethical standards.

Why should investors invest in Aasa loans on Mintos?

Meliina Räty: Aasa has been operating since 2010 and has attracted equity investment from the owners of one of Poland’s largest telecommunications operators, providing a secure and ethical investment. The Aasa Group has significant funding from multiple organisations including Santander bank and does not completely rely on one source of funding which ensures our security against demand fluctuations and the stability of business operations.

In addition, we are still the only loan originator that offers investment opportunities in Swedish krona (SEK) on the Mintos marketplace. If you use Auto Invest on Mintos and want to invest in Aasa loans issued in Sweden in SEK, you can adjust your Auto Invest settings accordingly.

What are the benefits for investors who invest in Aasa’s long term-loans?

Meliina Räty: In order to have a competitive offer to customers, Aasa is slowly moving towards larger amounts and longer loan terms. It enables us to reach a larger scope of customers and to better service our reliable borrowers. Investors on Mintos can also benefit from the higher availability of good quality and more stable longer-term Aasa loans. The overall demand in all markets is for higher value and small instalments through longer terms, so we need to work on finding the balance between an attractive and competitive offer to customers whilst taking investor preferences into account.

Are you planning on scaling up your business in markets you are already operating in?

Meliina Räty:  After the initial market entry phase in Sweden, where we focus on building a strong and accurate credit scoring model, we are now ready for scaling up the business. During 2018 we are aiming for tenfold growth, increasing volumes by expanding the sales channels, optimising the current ones in operation and improving the overall customer experience to secure a high rate of retention from the start. We will continue offering fast, easily accessible, transparent and competitively priced products to our customers. Our vision is to be a widely recognised and trusted non-bank consumer finance provider on the Swedish market.

Ovais Siddiqui, CEO of Aasa Polska: Our plans are to drive profitable growth further into the year. Our goal is to achieve 100 000 active customers by the end of December and deliver EUR 61 million of revenue and a EUR 102.8 million loan book with EUR 137.6 million of loans issued. This will be achieved by more efficient penetration into our application base,  further development of Aasa’s credit evaluation procedures and more detailed segmentation of products by customer risk profile. Additionally, from May, we will be supplementing both our SME and personal loan offerings with market leading products in combination of price, duration and value.

Does Aasa have plans for expansion into countries that you don’t currently operate in?

Meliina Räty: Yes, Aasa Group is looking to expand to new markets as well. In December 2017 our Romanian entity Aasa Finance IFN SA was authorised and registered by the National Bank of Romania and we plan to enter this market in the second half of 2018. We are also in the process of analysing a few other markets and we will certainly keep investors on Mintos posted on any developments.

How has Aasa performed so far in 2018?

Meliina Räty: In the first quarter of 2018, Aasa Kredit Svenska AB was still fine-tuning its score models. However, despite that, we issued EUR 2.1 million loans and managed to increase the active customer base by 15% reaching 4 600 and a EUR 5.6 million loan book. Now with the scoring model in place, we are confident and ready for further growth through new sales channels, whilst also developing the ones we currently have.

Ovais Siddiqui: The first quarter of 2018 has consolidated Aasa Polska’s position as a leader in the Polish market. In March we issued a record of EUR 12.5 million of loans (EUR 30.4 million year-to-date and 7% over budget) and had accumulated 82 000 performing active customers. In Poland, customer demand is still very strong and we have seen large growth in offline sales through stronger broker relationships. Customers that come from our online channels is also growing, and in this area, we have significant plans to drive additional value and penetration.

Year-on-year applications have tripled to nearly 300 000. Over the course of 2018, we will be developing and marketing our online platforms and adding state of the art customer orientated fintech solutions to drive this channel. I have every confidence that 2018 will be an outstanding and record-breaking year for the business and look forward to reporting our results in the forthcoming quarters.

Aasa recently signed the Diversity Charter in your Polish, Estonian and Swedish affiliates. The charter promotes cultural, ethnic and social diversity within a work environment. What other great initiatives have you achieved?

Ovais Siddiqui:  In order to support this idea and to show that diversity makes us special, we have launched an employer branding movie with employees from Aasa that come from different countries and cultures. You can watch the video here. Moreover, in the last quarter, we officially became members of the Responsible Business Forum (Forum Odpowiedzialnego Biznesu) in Poland to help share and develop our Corporate Social Responsibility (CSR) programmes with some of the most influential and responsible companies on the Polish and international market. In addition, we are about to relaunch our very successful 2017 Aasy Netu (Aces of the Net) CSR programme to help educate a significant sector of society in the benefits of the digital world and how it can improve their lives.

How is Aasa regulated?

Meliina Räty: Aasa Kredit Svenska AB is under the supervision of the Swedish Financial Supervisory Authority (SFSA). We obtained the license in February 2017 and launched our operations soon after in May 2017. In addition, the Swedish Consumer Protection Agency also issues general guidelines on consumer credit. At Aasa we are firmly committed to being a responsible lender in all our markets, conducting our business ethically and transparently.

Ovais Siddiqui: Aasa Polska is regulated under the Consumer Credit Act as adopted by Polish legislation and under the direct fee regulation, share capital limitations and KNF (Banking Regulator) registration outlined in the law changes of March 2016.  

We are also monitored by the Polish Office of Consumer Protection and Financial Ombudsman.  We are very supportive of the regulation in the marketplace and operate well within the regulations, particularly with respect to fees. We believe the current regulations are instrumental in maintaining a stable and safe environment for our customers and a sustainable industry of non-bank lending in Poland.

What interest rates do you charge to borrowers?

Meliina Räty: In Sweden, we currently issue loans with APR ranging between 35-46%.

Ovais Siddiqui: Due to differences in cost structures and customer base our average APR in Poland is 73.6%.

Why have the interest rates you offer to investors decreased on Mintos? What are your future trends and predictions regarding this?

Meliina Räty: Aasa strives to continuously improve its offer to our customers to remain competitive and in order to do that, we need to work towards lower funding costs. Also, as the company becomes more established the decrease in interest rates to investors is a natural development.

Ovais Siddiqui:  Aasa Polska has developed into one of the biggest lenders in our sector of the Polish market. The security and reliability of the business have invited the interest of significant investors into the business including private equity and banks. Consequently, we are continuously aiming to drive down our cost of funding which we hope to pass on to our customers as better value loans and add a significant competitive advantage to improve the sustainability of the business.

Where do you see the market for consumer loans going in the markets you operate?

Meliina Räty: Overall we see companies moving away from high APR short-term loans. As a result, these lending companies need to be able to better evaluate customers so they can offer less risky lower APR longer-term loans. I think the general sentiment from state-run regulators and authorities is that the time for more expensive APR payday lending is over but also that lenders will need to be granted access to more data so they can make better credit decisions.

Ovais Siddiqui:  The improvement in data points and credit information has meant that the market has been able to extend the size and duration of loans to our customers.  We believe that this trend will reach a flattening point soon as we reach the level of meeting supply with demand. The further development will be using this enriched data to offer loans to customers that we would normally reject due to insufficient information at present. This will enable the business to encroach on the sizeable doorstep lending market in Poland.

Where do you see Aasa in 5 years?

Meliina Räty: Five years is a very long time in the fintech sector, so its difficult to say how far we can go at that time. We are aiming at a EUR 1 billion loan book mid-long term so by the time we reach it I think Aasa will be one of the leading lenders in most significant European markets and at least a few outside Europe.

Ovais Siddiqui: We see Aasa Polska as being the largest lender by far in our sector. We aim to be the cheapest and farthest reaching (in terms of customer range and base) and offer the widest spread of tailored products.  We are setting ourselves a goal of 250 000 customers in the Polish market.


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