Indonesia’s IDEAL takes the pain out of applying for mortgages – TechCrunch

Applying for mortgages is often a time-consuming and disorganized process with reams of manual paperwork required. Based in Jakarta, IDEAL simplifies the process with a platform that allows users to compare mortgage products and apply for them at multiple banks at the same time. The startup announced today that it has raised $3.8 million in pre-seed funding led by AC Venture and Alpha JWC, with participation from Living Lab Ventures and Ciputra Group.

The funds will be used for product development, contracting and expansion of its products. IDEAL plans to add other key loan products and expand to more Southeast Asian countries.

Started last year, IDEAL’s founding team includes Albert Surjaudaja, Ian Daniel Santoso and Indira Nur Shadrina, with Jeganathan Sethu joining this year. Prior to launching IDEAL, Surjaudaja was former head of operations strategy for the digital payment service OVO.

IDEAL founders Albert Surjaudaja, Indira Nur Shadrina and Ian Daniel Santoso

IDEAL founders Albert Surjaudaja, Indira Nur Shadrina and Ian Daniel Santoso

Surjaudaja told TechCrunch that IDEAL was started “with the thought that consumer loans in Indonesia are broke.”

“Used responsibly, credit is a vital part of fueling the growth of economies. It acts as a multiplier effect in generating value,” she added. “With that in mind, Indonesia has one of the lowest credit/GDP ratios in the region, which means there is a lot of potential economic value that can be unlocked. There are several reasons for this, but one of the main ones is the lack of good, affordable options when it comes to loan products.”

Surjaudaja said traditional retail banks offer a relatively poor digital experience for their consumer credit products, making them less accessible. At the other end are P2P loans and BNPL startups, but their products are centered around smaller, more consumptive loans.

“We feel there is a clear gap in the market, namely conventional, productive, larger-scale consumer loan products offered on an easy-to-use digital platform,” he said.

Surjaudaja says IDEAL chose mortgages as its first consumer loan product because of its market potential, citing a 2021 Bank Indonesia survey that says the country’s mortgage sector is valued at $39 billion, with a Projected CAGR of 17% over the next five years. Generation Z and Generation Y are expected to become the main audience in the real estate industry.

Indonesia’s mortgage penetration rate is also just 3% of local GDP, one of the lowest in Southeast Asia.

Surjaudaja added that the traditional mortgage process is very manual, highly fragmented and requires a lot of time and effort from clients.

For example, most people don’t have information about how the mortgage process works, making it confusing. The document submission process is also manual and non-standard with multiple parties involved and documents with confidential information handled insecurely. Surjaudaja said consumers suffer from a lack of transparency on rates and availability of different options, and an opaque application process that means they have to contact their agent multiple times.

IDEAL’s digital platform seeks to solve these challenges. While mortgages are currently primarily suggested by real estate agents, IDEAL allows buyers to select their own mortgage products. It also has a feature called IDEAL Checking that allows people to check their credit instantly.

It helps users choose a mortgage by calculating costs and installments, and also includes a direct application system that allows users to apply across multiple banks with a dataset and a real-time tracking system. IDEAL says its digital system is secure and minimizes human errors and data leaks that often occur during paper-based mortgage processes or messaging apps.

Other features include detailed information on real estate units of IDEAL’s promoter partners, different mortgage products from banks and IDEAL Compass, a short questionnaire that helps the platform understand what a customer needs and produces a simulation of monthly payments, term and other information about a mortgage.

The startup is currently focused on marketing primary housing, but plans to expand into secondary housing and mortgage refinancing/acquisition products. It will also launch a dashboard that will help users monitor and manage their mortgages. IDEAL also plans to expand into other key loan products, with a long-term vision of entering more Southeast Asian markets such as Thailand, the Philippines and Vietnam.

Surjaudaja said that 60% to 70% of Indonesia’s mortgage market is below the secondary housing category. “Our market research signals a strong need and demand from Indonesian consumers for an easy way to acquire/refinance their current mortgages, as the difference between fixed and floating mortgage interest rates in Indonesia can be quite considerable,” with a difference of up to 10%. .

IDEAL monetizes through commissions from banks and real estate developers for each successful loan application through the platform. It currently partners with five banks, including CIMB Niaga, OCBC NISP and Maybank, and several of Indonesia’s largest real estate developers such as Sinar Mas Land, Ciputra Group and Agung Sedayu Group. Its platform connects with banks through APIs to simplify the data collection process.

Some of IDEAL’s competitors include Pinhome, Cermati and Cekaja. Surjaudaja says Pinhome’s business model is more property-centric, providing an end-to-end property-related solution from home discovery to home financing. On the other hand, he describes IDEAL’s business model as “customer-centric” and more fintech rather than proptech oriented. Cermati and Cekaja, meanwhile, are financial aggregators that allow users to browse mortgage products from various banks, but Surjaudaja said they are not fully digital, do not provide contextual data, and still require an online-to-offline process, without a pre-order. credit score. -check and pre-filter candidates for banks.

In a prepared statement, Adrian Li, managing partner of AC Ventures, said: “Indonesia’s mortgage penetration is currently at 3% of local GDP. This is low compared to Malaysia and Singapore, which are at 30% or more. This represents a $30 billion opportunity if Indonesia can double its mortgage penetration to 6% through better financial access. IDEAL’s strong team identified a bottleneck in the mortgage industry and brought domain expertise in fintech and real estate to build a one-stop shop for mortgages in Indonesia.”

Leave a Reply

Your email address will not be published.