CEO of MPOWER Financing, a fintech student loan company, shares business strategy



Financing MPOWER, a global provider of education loans, recently provided equity investment of $ 100 million. The new funding is added to the $ 60 million MPOWER received earlier this year from Tilden Park Capital Management who also participated in the current round with ETS strategic capital

Other investors included King Street Capital Management, Drakes Landing Associates and Pennington Alternative Income Management.

We recently contacted Manu Smadja, General director Financing MPOWER, which is a public benefit corporation whose stated mission is “to reduce financial barriers to international education.” The company is based in Washington DC with offices in New York and Bangalore, India.

The firm was founded by Manu Smadzhey and Michael Davis back in 2014, both of them visited INSEAD Paris where they first met. Our conversation with Manu Smadzha is presented below.

Crowdfund Insider: You mentioned that you are using your cross-border lending platform, big data and global infrastructure to fund international and DACA students in North America.

How did you define this as a key requirement and what long-term benefits has your organization been able to deliver?

Manu Smadja: MPOWER Financing’s mission is to remove the financial barriers many prospective students around the world face when visiting schools abroad. International and DACA students simply do not have access to the types of programs that American students can take advantage of, including federal student loans, grants, national scholarships, and more.In addition, they are often excluded from the many private loan options available due to the lack of domestic credit history.

We apply the latest technology and processes to fulfill this mission, ensuring that we can help as many students as possible with maximum efficiency. This includes examining many different data sources as well as forecasting future income potential to determine the applicant’s long-term credit risk.

We also understand that funding is only part of the equation. We provide additional career guidance services and resources through our Path2Success program, which helps our students prepare for the unique challenges they may face when hiring. This, in turn, leads to significantly better loan results and lower than average loan default rates.

We are constantly rethinking how we use technology to transform our business. We are currently studying machine learning to help identify trends and patterns in customer support, which will help us better resolve student questions and concerns.

Crowdfund Insider: Your website says people can “finance their dreams on their own.” Applicants can apply for a loan and scholarship to study in the US and Canada. How does your fintech platform make this possible?

Manu Smadja: Unlike the traditional financing options available to international and DACA students (usually regular banks in the student’s home country), MPOWER loans do not require third party consent or collateral for approval. Our approval process is also based on more than just credit history. Instead, we created our own algorithm that takes into account future earning potential and analyzes disparate data sources such as employment history and credit history at home and abroad.

This model ensures that promising students gain access to education without undue financial burdens on their families. MPOWER loans are approved instantly and are available at competitive interest rates.

By combining and evaluating the many factors that will contribute to their success and ability to pay, we enable prospective students who are not involved in the traditional lending process to fund their higher education efforts in the US and Canada.

Crowdfund Insider: You pointed out that you are a welfare corporation founded by international students for international students and your mission is to “make socio-economic mobility limitless.”

We now live in a world with rapid globalization and the development of telecommunications technologies, but some processes, such as obtaining loans, are still performed inefficiently using outdated platforms.

How can fintech improve this process from the perspective of learners and education providers?

Manu Smadja: Our global financial systems have lagged significantly behind the pace of innovation seen in other sectors of the consumer economy. While online applications and accessibility may be more common, especially due to the pandemic, the server systems supporting these technologies are cumbersome and often outdated. Typically, the first option for many international students to finance their studies is through traditional traditional banks in their home countries. Not only can the lending process take longer, most of these lenders still use conventional lending arrangements to determine eligibility for a loan.

Since our inception, we have striven to rethink and redefine how international students finance their studies. This includes removing prohibitive barriers such as requiring bail or having a co-ruler. Thanks to the data and our proprietary algorithm, we get a more detailed and complete financial picture of each applicant to determine if they are eligible for a loan.

Naturally, our model removes funding barriers by ensuring that every transaction is financially sound and does not pose a credit risk to our business.

Crowdfund Insider: You have processed over $ 2 billion in loan applications. You also support over 190 countries with citizenship, as well as over 350 US and Canadian schools.

How can financial technology be used to speed up the loan application process? Does your software use any artificial intelligence or machine learning algorithms to improve the overall process?

Manu Smadja: We strive for faster approval and processing, but this process must be based on accuracy. We recently launched our Instant Offer product, which allows students to check their eligibility in 30 seconds and apply online in less than 30 minutes. Based on the information we collect; we can provide a conditional credit offer in real time.

Crowdfund Insider: What are your plans for this year and beyond? What technological improvements are you planning to implement in the existing platform?

Manu Smadja: MPOWER raised a total of $ 160 million in 2021, including $ 100 million in capital as of July 13th. These tools are used to scale and automate our operations, allowing us to help more students.

While many companies will use these investments to expand their product portfolio, we want to stay true to our core offering: lending to promising students and providing tools and training to help prepare students for employment. This means investing in our team and technology.

Crowdfund Insider: Earlier this year, MPOWER partnered with Sally Mae to expand access to higher education, especially for international and DACA students.

Please tell us about your goal of using this strategic partnership to provide better services.

Manu Smadja: We are always looking for organizations to collaborate, especially when they bridge the gap between funding and students’ dreams of getting higher education. The partnership with Sallie Mae helps fill the gaps found in traditional lending services by offering private loan lending products that students can apply for with an eligible US citizen or co-signer resident in the US. When a co-author is unavailable, MPOWER works with Sally Mae and uses its own data and technology to support promising international students.

We look forward to working with more credit institutions to help more students achieve their educational goals.


Source link