We’re here for another blog in our series on VIAINVEST loan originators. It is time to sit down with VIASMS.cz’s country manager, Sergejs Kaluznijs, to shed light on their operations.
Background and Evolution
VIASMS has been present in the Czech market for over twelve years, during the majority of which we have offered payday loans to our clients. In the early stages of 2020, a decision was made to transition to a new product – a credit line, enabling our customers to access larger funds and make gradual or complete repayments based on their current financial circumstances.
Like many other loan originators within the group, VIASMS.cz was recognised in collaboration with VIAINVEST as an excellent opportunity to secure regular funding. Since 2016, this mutually beneficial partnership has been an integral part of our business and continues to be so to this day.
Our clients are residents of the Czech Republic with a moderate income level who experience unforeseen expenses, impulsive and planned purchases, or want to have a ‘reserve wallet’.
Role and Operations
In the VIAINVEST ecosystem, VIASMS.cz does not necessarily play a leading role. VIASMS.cz is characterised as a boutique by VIAINVEST Platform Lead Aleksandrs. It represents a small yet high-quality portfolio within our operations.
We aspire to increase our share and significance for VIAINVEST without compromising quality. This is an ongoing focus of our efforts.
The client onboarding process at VIASMS.cz is highly comprehensive. When assigning a credit line to our clients, we must analyse the client in terms of the potential non-repayment of the loan and view the loan as a risk for the prospective client. Local regulations have strict requirements, and we follow them closely.
The annual report shows that our total loan portfolio exceeded 4.5 million EUR by the end of 2022. Meanwhile, Non-Performing Loans (NPL) constitute a significant portion of the Czech portfolio. The primary reason for this is the specificity of the local CIT calculation (accounting provisions are created at 365+ DPD) and clients experiencing an active insolvency process. In such cases, the debt repayment plan extends over a period of 3 to 5 years. Notably, our debt recovery processes undergo periodic audits by local regulators and push us to engage in protracted negotiations with clients to settle outstanding amounts, endeavouring to reach agreements without intermediaries such as collection agencies or debt assignments.
Market and Competition
The Czech market is highly saturated. Besides commercial banks, there are several dozen non-bank lenders in the market. In such a competitive environment, customers are more demanding and selective. Our main strengths lie in competitive terms (offering one of the lowest interest rates in the market), accessibility, quick response time, and quality of service.
Challenges and Learnings
The effects of COVID and subsequent high inflation have significantly impacted the financial situation of many of our clients, resulting in challenges related to repayment discipline. Negotiating and accommodating is crucial – this approach results in more loyal clients over time.
The local market is quite intricate, especially in the context of acquiring new clients. The tools that prove effective in different countries (originators) are not as impactful here. One of the primary sources of traffic is affiliates, with whom we consistently strive to strike a balance between the cost and quality of traffic. Despite this, we process approximately 6,000 requests monthly, approving around 15-20% of them (new, repeat, top-ups). As of the end of November 2023, the current portfolio amounted to 2.6 million euros.
We aim to grow ambitiously. Our risk management and local regulations moderate our growth pace. We want to grow faster, but overly ambitious steps might “tear your pants”.
Due to the prevailing bias against non-bank lenders, any call or email expressing gratitude from our clients is, to some extent, a small but significant success story.
Future Outlook
As I mentioned previously, we are full of justified ambitions to increase our portfolio and, consequently, our share on the platform, but without compromising on quality and being a boutique no more.
This is it for the third blog in our series on VIAINVEST Loan Originators. We hope You stick around for what we’ve got in store next. Meanwhile, read the rest of our content on the ever-changing world of FinTech.
Happy investing!
Team VIAINVEST
