Fintech multi-artist: When 4finance was making 29 million euros a year, Toms left the company to create his own loan platform
Katrina Iljinska
Forbes Staff
Toms Jurjevs was only 22 years old when he started managing a rather small at that time enterprise for private crediting 4finance. When it was making 29 million euros a year, Toms left the company to create his own loan platform.
Upon entering the Sun Finance office, details immediately catch your eye – a well-thought-out layout with a convenient kitchen for employees, an artist-drawn portrait of each employee framed on the wall, geographical distribution of rooms and clock showing time in countries where Sun Finance does business. There is one detail in Toms' office – colleagues and guests are greeted by two dogs adopted from a shelter, who delight him throughout the day and, undoubtedly, disarm any guest, thus testifying to the presence of the democracy of this company. Attention to details is at the core of Sun Finance's strategy, and the main goal is to make the service for customers as convenient and simple as possible. This has paid off – in just three years since the founding of the Sun Finance group, the company's turnover last year reached 101 million euros and, according to Jurjevs, will exceed 130 million euros this year. Sun Finance already operates on three continents, employing over 750 people in seven countries. Toms calls himself a fintech (financial technology) multi-artist because, after all, a financier would be too conservative and limited.
Daily, he works with a wide range of tasks – from marketing to customer service, from data science to IT and more. He started working while still studying – he was engaged in advertising, which was placed on bicycles. From an early age, he wanted to work in business in the future.
While studying at the Stockholm School of Economics in Riga (SSE Riga), he applied for a vacancy at 4finance, which was engaged in non-bank lending. At that time, 4finance's turnover was 135 thousand euros per year, and the entire group of companies – about five million, while employing a relatively small number of people, about 20, and mostly young ones. “Despite my lack of experience, I was accepted because I had fresh ideas that were not limited to what the bank employees could offer who were my competitors for the position at the time,” says Toms, citing as an example the opportunity of obtaining credit on machines similar to ATMs and, of course, advertising the company on bicycles.
The 4finance group was already making 29 million a year when Toms felt that everything had already been done and that a new career challenge was needed. In addition, he wanted to sit not only at the executive's desk, but also to find a place for himself among shareholders.
A year later, together with his best friend and classmate Emīls Latkovskis, Toms decided to try his hand by establishing the fintech platform Sun Finance. From the very beginning, the idea was to create an international business. When Sun Finance started operating and showed its growth potential, Aigars Kesenfelds invested in the further development of the company as a financial investor. Initially, the Sun Finance team consisted of people Toms had worked before – those whom he trusted 100% and knew that he would always be ready to explore more with them. “We started in Latvia because we knew this market the best. Then Denmark and Poland,” says Toms.
In the first year of the enterprise's existence, even in less than a year, Sun Finance managed to attract 230 thousand users, the loan portfolio reached almost 13 million euros, and the total amount of loans issued at the end of the year exceeded 35 million euros and continued to grow rapidly over the years.
But let's be honest – online money lending is not exactly an area where you can reinvent the wheel. You can grow in volume only by redistributing the market, in turn, you can gain new customers by offering something better, thinking outside the box.
Toms decided to focus on details, examining what might be the factors that create barriers to users. The three pillars in the development of the enterprise have become, first of all, the customer journey or the client's experience. The goal was to achieve that the customer's journey to a full service was as fast and short as possible without unnecessary obstacles. The second factor is the focus on the back-end system or the part of the platform that the user does not see, but which is the basis of the entire enterprise. “I think about ten million euros could have been invested in the IT system so far,” says Toms.
The third pillar, the most important for the business, is the customer risk assessment system, in particular, using data science solutions which help to determine the risk of whether the customer will be able to repay the loan at all, how much of it and for what period of time. Currently, the assessment of each application in the Sun Finance fintech platform is based on a thousand variable factors that are processed using data science models, and the end result is a score that allows the company to predict the actions of the borrower under different circumstances. This approach to business has already proven itself, and today Sun Finance operates not only in Latvia, Poland and Denmark, but also in Kazakhstan, Mexico, Vietnam and Sweden. Each market is different in both culture and habits,
which is why data science is so important and allows to develop sophisticated risk assessment models based on customer habits. “In Vietnam, for example, people don't have any official salaries, account statements or anything like that at all. We rate them by their habits,” says Toms. The choice of countries is also related to the number of smartphone users. People in Vietnam and Mexico literally live on their phones. According to Statistics, there are about 38 million smartphone users in Vietnam this year, a 30% increase from when Toms started his business three years ago. In Mexico, this number reaches 80 million this year. “Due to poverty, they actually missed the computer age. When the computer was the main work tool in Europe and all around the world – and, in fact, it still is – people in Vietnam did not even have an email address. In turn, phones are more available, and their whole life happens in them,” says the entrepreneur. The product on its own is targeted at the phone users so that you can get a loan from a telephone. The average Sun Finance client in Europe is between the ages of 25 and 40, and primarily borrows for large day-to-day purchases. However, in Vietnam, half of the clients take loans for small businesses, for example, to purchase the necessary ingredients for a street food cafe. “The bank will never give him a loan and he will not be able to prove any income because everything is unofficial.”
From the outset of Sun Finance, Toms has chosen a democratic management style, which may seem risky to many as it can be difficult to monitor employee performance. However, the entrepreneur believes: “The younger generation, which interests me, is increasingly emphasizing that the material side, salary, is not the only thing that is important in an employer. Increasingly, these factors are the work environment, development, growth opportunities and the team in which they will work. «The Sun Finance team is divided into regions, or the so-called HUBs, and legally each region has its own company. Each region also has its own chairman of the board and core team; the oldest regional leader is only 35 years old. “This HUB structure helps to maintain focus. Each HUB leader focuses on their own markets
and should only think about the business development of two or three, not 7-10 countries. Each manager is actually responsible for his or her enterprise,” says Toms.
In characterizing the challenges and problems of building a global business, Toms acknowledges that the most difficult decisions had to be made relatively recently, during Covid-19.
“I had to fire employees and everyone's wages were cut for three months. At the same time, we worked 24/7 to adapt to the new reality. Before the crisis, we grew rapidly, besides, without any major problems, and suddenly one day I had to make a difficult decision such as dismissal,” Toms recalls the events of this spring. However, the Covid-19 crisis, the impact which no one could have foreseen in the spring, has ultimately had a positive effect. “People travel less, have become more cautious about what they spend, and payment discipline has improved,” says Toms. Despite the spread of the coronavirus worldwide, the financial technology company Sun Finance is planning to increase its turnover this year as well. In the first nine months of this year, turnover has already reached 92.5 million euros. “The team has done a very extensive job so that we can successfully close this year. In March, we implemented a very prudent lending policy so that our data analysts could create risk assessment models that match the new reality during this time frame,” says Toms. In turn, to ensure cash flow, Sun Finance issued securities – bonds – in the amount of up to 15 million euros during the crisis.
According to the statistics of the Consumer Rights Protection Center, a non-bank creditor supervisor, on 30 June this year, 57 capital companies engaged in consumer lending were licensed in Latvia, of which 19 had the right to issue distance loans. At the end of the year, four capital companies disappeared from the market. The amount of new loans issued in the first half of the year has decreased by 20 percent. However, Toms Jurjevs looks at the industry positively: “Fintech in Latvia does not lag behind either Lithuania or Estonia. We have strong professionals who can contribute to the economy.” Toms is already doing it.