Financial markets have also rebounded this year, but we are nonetheless being cautious and making sure to give students more information on exactly when their loans will be confirmed and disbursed.
1. Tell us about your business model, eg how did the idea come about and how does it work (step by step procedure)?
We created Prodigy Finance with a philosophy that funding shouldn’t be a barrier to education. It was 2007 when three MBA students recognized that traditional banks do not meet the needs of international borrowers. They require guarantees, co-signers, guarantors, or documents that most students just don’t have. That’s when we thought about using fintech to redefine the student loan market and make quality education accessible. Prodigy Finance is not a bank. We raise funds from investors and impact institutions (who invest in the leaders of tomorrow while earning financial and social return), and turn them into student loans for international students.
2. What are the unique key points of your business?
We follow a simple and modern loan process based on the future potential of students and not on their current situation. Our innovative and borderless model means that we do not ask for collateral or co-signer and while we do ask for an applicant’s credit history, it is also possible to get our loans without submitting it. We are more interested in which college / university students go to and which course they will study.
3. How are you different from existing competitors?
What sets us apart from other lending platforms is our potential-based lending model and global footprint that allows us to lend to students that other lenders ignore. In fact, 89% of our clients said Prodigy Finance was the only way to finance their degree. Additionally, our loan process is completely online – all application, verification and documentation is done through a secure portal on our website. The loan amount is then paid directly to the school (which withholds the tuition fees and passes on the requested living expenses to the student). We also have a team of agents available to chat with for any assistance.
4. What is the state of funding and the monetization model?
Last year we struck a historic deal with the US International Development Finance Corporation, which is essentially the US development bank. We also have facilities with Goldman Sachs and Deutsche Bank and have raised funds from our community of private investors. We are therefore in a good position this year. However, we continue to explore other funding arrangements with the goal of adding even more growth next year.
Our monetization model works in two ways: a one-time administration fee which covers our creation process and a management fee, which is paid by our investors so that we can manage student repayments. We don’t make money based on the rates on our loans.
5. What challenges do you face in running your business?
2020 has been a difficult year for many. The effects of COVID forced financial markets to condense, which limited the amount of capital we could timely provide to students last year. We also found serious uncertainty among students traveling abroad for higher education. While we initially saw a significant share of students delaying their studies until 2021 or beyond, we have seen a strong upturn in student demand this year. Financial markets have also rebounded this year, but we are nonetheless being cautious and making sure to give students more information on exactly when their loans will be confirmed and disbursed. In addition to this, while India is not affected, there are other markets in which we have had to limit our activities due to regulatory or funding restrictions.
6. What has the reaction of the people been so far?
At Prodigy Finance, we understand higher education. Unlike most of our competitors, we fully appreciate and understand the challenges a student faces when embarking on a study trip abroad. The idea of Prodigy Finance was born from the personal difficulties of our founder while obtaining a study loan for his MBA at INSEAD Business School in France. Our team includes a good mix of people who have studied abroad and who keep customers at the heart of everything we do. As a result, we were able to create a unique position for ourselves in this competitive market. Our brand is now well known among study abroad applicants in India and many of our current borrowers end up recommending us to their friends and juniors which has been a major driver of our growth.
7. What are the details of the pull (like users, app downloads and other company accomplishments, etc.)?
2020 has been a very difficult year for everyone and it was no exception for Prodigy Finance. However, we are proud to have come out of 2020 stronger and more resilient than ever. We took some big milestones last year, the first being that we crossed the $ 1 billion threshold in terms of loans disbursed, and we passed a total of 20,000 funded students – from 130 nationalities. India, obviously, has played an important role in helping us reach these important milestones. Apart from this, we have also been successful in raising funds from the US International Development Finance Corporation (DFC), a US government-owned development bank that focuses on solving the most critical challenges facing developing countries. development.
8. How do you see the expansion?
In the last 18-24 months, we have seen a growth in the number of types of courses we support (we were initially only funding business related courses, but as of 2019 we are funding STEM and health courses. ), the number of schools we work with far away) and the countries of study (we are looking to expand our schools in Canada and even add Australia very soon).
India is a very important market for us and we are increasing our attention in this regard. Our loans do not require collateral (collateral / security) or co-signer and instead are based on the student’s future earning potential, which is established due to admission from a leading school / university. This approach works very well for an average Indian student who comes from the middle class but dreams of building a better life. We therefore aim to expand our reach beyond Tier 1 cities in India and in doing so, we are actively building and expanding our network of study abroad partners across India. We aim to work closely with admissions consultants, test prep companies and deep pocket loan counselors in India, so that we can meet the needs of deserving Indians, who may not yet know Prodigy Finance.
9. What are your marketing plans?
At Prodigy Finance, we focus on three key areas while creating marketing strategies:
Partners and third parties – We work with schools directly with benchmark partners in the many sectors, as well as with some influencers.
Direct engagement with students – We have Whatsapp and Telegram groups to be in touch with students in real time, we run regular webinars and we make sure our potential clients can chat with students we have already funded through our website.
Proprietary channels – Obviously we have our website and are active on Instagram and LinkedIn. We are working hard to publish more content this year and improve its quality for students. Watch this place!
10. What has been the greatest learning to date?
Overall, in 2020 we saw a huge demand for our loans, which meant there were specific segments of students that we couldn’t serve. Although 2020 has been a very difficult year for the student community in general, we have tried to support them in the best possible way. Indian students, for example, have experienced many uncertainties in obtaining their student visas. They also faced challenges in terms of adapting to online courses, as travel to study destinations such as the United States was not fully open. We had a good deal of the lessons learned from the storm that 2020 was. First and foremost, we have developed a better appreciation of the impact we can have on our student borrowers. For many of our Indian students, Prodigy Finance is the only option they have for obtaining a student loan. We have become more aware of this and are working hard to ensure that we can serve more and more deserving students. We also learned the importance of timely communication and transparency and made some changes in our process to incorporate these aspects.
11. What is the size and opportunity of the market?
The market opportunity for international student loans stands at $ 100 billion, based on projections that by 2025 there will be 8 million international students in the world. India and China have historically led the charge in sending the largest number of students abroad each year. There were nearly a lakh of Indian students who completed higher education in 2020, which was slightly lower than 2019, largely due to uncertainties over the pandemic. Overall, we operate in a large and growing market, even if you only consider India as a segment.