Applying for a mortgage is often a long and disorganized process, with tons 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 from 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 funding will be used for product development, hiring and expanding its products. IDEAL plans to eventually add other major lending products and expand to other Southeast Asian countries.
Created last year, the founding team of IDEAL includes Albert Surjaudaja, Ian Daniel Santoso and Indira Nur Shadrina, who Jeganathan Sethu joins this year. Prior to launching IDEAL, Surjaudaja was the former head of operations strategy for digital payment service OVO.
Surjaudaja told TechCrunch that IDEAL was started “thinking that consumer lending in Indonesia was broken.”
“Used responsibly, credit is an essential element in fueling the growth of economies. It acts as a multiplier effect by generating value,” he added. “With this in mind, Indonesia has one of the lowest credit to GDP ratios in the region, which means there is a lot of potential for economic value that can be unlocked. There are several reasons for this, but one of the main ones is the lack of good options available when it comes to loan products. »
Surjaudaja said traditional retail banks provide a relatively poor digital experience for their consumer lending products, making them less accessible. At the other end are P2P lending and BNPL startups, but their products are focused on smaller, more consumer-oriented lending.
“We believe there is a clear gap in the market, namely conventional, productive and larger consumer loan products offered on a user-friendly digital platform,” he said.
Surjaudaja says IDEAL chose mortgages as their top consumer loan product because of its market potential, citing a 2021 study by Bank Indonesia that says the country’s mortgage sector is valued at $39 billion. billion, with a projected CAGR of 17% over the next five years. Generation Z and millennials are set to become the primary audience for the homeownership industry.
Indonesia’s mortgage penetration rate is also only 3% of local GDP, one of the lowest in Southeast Asia.
Surjaudaja added that the traditional mortgage process is very manual, very fragmented and takes a lot of time and effort from clients.
For example, most people lack information on how the mortgage process works, which makes it confusing. The document submission process is also manual and non-standardized with multiple parties involved and documents containing sensitive information handled without security. Surjaudaja said consumers suffer from a lack of transparency in the pricing 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 mainly offered by estate agents, IDEAL allows buyers to select their own mortgage products. It also has a feature, called IDEAL Checking, which allows people to check their credit instantly.
It helps users choose a mortgage loan by calculating costs and installments, and also includes a direct application system that allows users to apply to multiple banks with a real-time dataset and tracking system. . IDEAL claims its digital system is secure and minimizes human error and data leakage that often occurs during paper-based or email-based mortgage processes.
Other features include detailed information on real estate units from IDEAL’s developer partners, different mortgage products from banks and IDEAL Compass, a short questionnaire that helps the platform understand what a client needs and produces a simulation of monthly payments, term and other information about a mortgage.
The startup is currently focused on primary housing marketing, but plans to expand into secondary housing and refinance/mortgage repossession products. It will also launch a dashboard that will help users monitor and manage their mortgages. IDEAL also plans to expand into other major lending products, with a long-term vision of entering more Southeast Asian markets like Thailand, the Philippines and Vietnam.
Surjaudaja said 60% to 70% of the Indonesian mortgage market is below the secondary housing category. “Our market research signals a strong need and demand from Indonesian consumers for a way to easily repossess/refinance their current mortgage, as the spread between fixed and floating mortgage interest rates in Indonesia can be quite large” , with up to 10% difference. .
IDEAL monetizes through commissions from banks and real estate developers for each successful loan application through the platform. It is currently in partnership with five banks, including CIMB Niaga, OCBC NISP and Maybank, and several of Indonesia’s largest property developers, such as Sinar Mas Land, Ciputra Group and Agung Sedayu Group. Its platform connects to banks through APIs to simplify the data collection process.
IDEAL’s competitors include Pinhome, Cermati and Cekaja. Surjaudaja says Pinhome’s business model is more property-centric, offering 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 leaning more towards fintech rather than proptech. Cermati and Cekaja, meanwhile, are financial aggregators that allow users to browse mortgage products from multiple banks, but Surjaudaja said they’re not fully digital, don’t provide contextual data, and still require an online process. online to offline, without prior credit assessment. – control and pre-filtering of candidates with banks.
In a prepared statement, AC Ventures Managing Partner Adrian Li said, “Mortgage penetration in Indonesia is currently 3% of local GDP. This is low compared to Malaysia and Singapore, which are at 30% or more. This represents a US$30 billion opportunity if Indonesia can double its mortgage penetration to 6% through improved financial access. IDEAL’s strong team identified a bottleneck in the mortgage industry and brought their expertise in fintech and real estate to create a one-stop-shop for mortgages in Indonesia. »