For many, the Covid-19 pandemic has slowed business growth and, for some, it may mean that they will have to shut their doors. It has been an unprecedented time of economic downturn, that the International Monetary Fund has tipped as potentially triggering a global recession worse than the recession triggered by the GFC. However, for some in the fintech industry, this has been a period of prosperity. Despite the economic downturn, many fintechs have seen continued investor support. In April, Xinja raised $433 million from a fund in the United Arab Emirates, and AirWallex gained unicorn status with a $252 million raise. More recently, Nium and Moneytree have completed successful raisings, and Joust has merged with Loan Dolphin.
Another impressive Covid-19 success story is InDebted. Starting as the brainchild of Founder, Josh Foreman, Indebted has grown from a small startup in 2016, to one that has recently raised $14 million in a Series A raising. InDebted’s point of difference from other large debt collection companies is that it focuses on making a better experience for the debtor. So much so that the company doesn’t like to use the word ‘debtor’. Traditional debt collection companies have long used abrasive methods of debt collection, such as sending letters riddled with legalese, harassing phone calls, and using debt collectors to aggressively recover debt. InDebted, on the other hand, uses machine learning technology to optimise how it reaches people in the way they wanted to be contacted, such as by email or WhatsApp. Easy to set up payment plans are offered to make recovery as simple and pleasant as possible. “Josh gained some exposure to the debt collection industry in 2015 while he was helping a client from his previous business recover some outstanding accounts,” explains Lachlan Heussler, InDebted’s Chief Commercial Officer. “He didn’t understand why the process of debt collection seemed so outdated and knew that there had to be a better way to do things. The idea for InDebted was planted and here we are today 4 years later.”
|“Technology plays a huge role in our company. The efficiency and scale we operate at is because we place technology and innovation at the core of everything we do”
Another point of difference is that InDebted sees themselves as a technology company that just happens to focus on debt collection. “Technology plays a huge role in our company. The efficiency and scale we operate at is because we place technology and innovation at the core of everything we do,” says Mr Heussler, “our amazing customer experiences are delivered using technology and it allows us to help more people every day.”
This customer-centric approach is how businesses should approach a post-Covid-19 recovery. As the economy slowly begins to enter the recovery phase, it will require the gentle approach that InDebted advocates for, in recovering many of the loans that were defaulted on during the economic downturn. Major banks are preparing for the economic effects of Covid-19 over the coming months in the form of loan defaults. ANZ have deferred their dividend payments, and have allocated $1 billion to cover Covid-19 related losses. NAB and Westpac have taken similar approaches, with the former reserving $807 million and cutting dividends, and the latter reserving $1.6 billion and deferring their dividend. This puts debt collection companies in a good position, one that InDebted has been able to capitalise on. InDebted’s success has shown that an empathetic approach can deliver better results and happier customers. This is clearly demonstrated by the company’s 4.9 out of 5-star reviews on Google Reviews with praise of the company’s human and compassionate approach to debt collection. InDebted has seen immense success with this model, taking on ASX giants such as Credit Corp Group, Collection House and Pioneer Credit. InDebted’s unique use of technology is to thank for their exceptional gross profit margins, which are reported to be between 75 and 80%, rather than the 24% experienced by traditional firms, and allows them to still make profit on debt recoveries as small as $16.
InDebted’s recent raising brings them to a total valuation of more than $50 million, but their journey is far from over with the company looking at expanding to the UK. “The UK is an exciting market for us in terms of the size of the market, how similar it is in relation to the Australian and New Zealand markets and the fact that we have had many potential clients reach out to us already enquiring about us entering the UK market,” says Mr Heussler, “we look at markets all around the world for opportunities and will probably look to enter another two markets early next year.”
Mr Heussler sees an opportunity not only in the UK, but in the market globally. “InDebted is convinced that there is an exciting opportunity for innovative debt collection solutions in developed markets globally. The incumbent industry players still operate using decades-old strategies and technology that we believe has not kept up with the preferences of modern-day consumers.” The future is looking bright for young disruptors like InDebted, who are turning to technology to solve decade-old problems ingrained in the financial sector. Mr Heussler is enthusiastic for the future of InDebted, and FinTech Australia looks forward to being involved in their journey.