A London fintech startup that helps foreign students fund their university studies by connecting them with rich alumni is on track to do half a billion dollars in loans by the end of the year.
Prodigy Financial has so far lent $200 million (£152.7 million) over its platform since launch in 2008, but CEO and cofounder Cameron Stevens believes loans will total $500 million by the end of the year thanks to several big institutional clients who are set to partner with the platform.
Stevens made the prediction at the Fintech Without Borders event in London this week, a series of panel discussions about how UK fintech could go global hosted by Prodigy.
Stevens said at the event last week: “When we started, we were thinking how do you fund someone from anywhere in the world who has high potential but really is restricted from credit purely because of structural factors. Potential is distributed equally around the world but finance definitely is not.”
Prodigy looks at the earning potential of graduates from various universities and uses them as a proxy credit score for overseas students who have been accepted to that institution but can’t get a loan.
Stevens says: “If you’re coming from India and you’ve been accepted to Harvard or London Business School or wherever it may be — all of the domestic students can access finance but if you’re coming and you’re crossing a border, none of your credit history is following you and you’re excluded from all of that.
“What this means is you’ve got this whole group of people that are premium profile, very high potential but under-served and excluded because of the difficulties of this going global piece.”
Prodigy Finance has so far provided student loans to 4,500 people, with an average loan size of $40,000. Most of the funding goes towards post-graduate students who are looking to do an MBA or similar. Stevens says it has a 99% repayment rate on its loans.
The platform has partnered with top universities around the world including London Business School, Oxford, Cambridge, INSEAD, Stanford, Wharton, and Harvard. Large markets for students applying for loans on the platform include India, Brazil, Russia, China, and Turkey. Prodigy also sees a steady flow of applications from UK students who are going to study in the US.
“When we started, we were driven to think of a very extreme version of what going global means — how do we fund someone wherever they are in the world?” Stevens says.
The platform initially launched with alumni and the schools themselves funding students but has since broadened out to include institutions. Credit Suisse pitches Prodigy Finance to its private wealth clients as an investment opportunity and Deutsche Bank recently signed on to lend directly on the platform.
Stevens expects to do up to 7,000 new loans by the end of the year, as more institutions come on to the platform. Those lending money on the platform earn an average return of 5.5%.
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