An Argentinean FinTech company relies on AI to provide peer-to-peer loans
Alejandro Cosentino is the CEO and founder of Afluenta, an Argentinean FinTech providing collaborative finance in Argentina, Mexico, and Peru. The company brings together people wanting to invest money and people looking for a loan. Relying on proprietary algorithms and solid branding, Afluenta is now launching into the BlockChain technology.
Afluenta was created to contribute to improving the financing system in the Latin American region, said Alejandro, who started his career in a consumer goods company after graduating with a business degree. He later became a consultant and worked for financial companies such as Visa, City Bank, and other banks in Argentina, before joining American Express and becoming Vice-President of marketing for Latin America.
He then worked for a company providing free internet access and decided that his professional aspirations were to mix financial services, and technology, which had always fascinated him, he said.
Peer-to-Peer Loans at Affordable Rates
In 2010, he founded Afluenta, which name is inspired by the Latin word “affluere”, which means “flow” or “go towards”. Afluenta, Alejandro explained, is a marketplace lending platformthat connects borrowers and lenders. “We are trying to take banks out of the equation”. “Banks are getting value but not delivering value”, he said.
Banks are usually focusing on the population segment with higher repayment capabilities, while Afluenta is also serving people with average repayment capabilities at the right interest rates.
“We connect people willing to invest money and who are looking for a better return than banks would offer, and people wanting to borrow money at affordable rates, helping all those people reach their objectives.”
Afluenta’s business model is based on fees and commissions that are charged for the companies’ different services, including the assessment process of borrowers, the online onboarding for lenders with an anti-money-laundering process, and insurance.
The system does not match one borrower with one lender but rather a large number of lenders providing funds for this one loan. Loans range from US$ 1,000 to US$ 20,000, with most loans averaging US$ 2,000 to US$ 3,000. Borrowers usually have a repayment schedule of 12 to 48 months.
The average client is a consumer in his 40s, an employee, using loans for projects such as a trip, remodeling his/her house, and special celebrations like weddings. Some people are also seeking to refinance their credits. Some 50,000 people are using Afluenta’s services in Argentina, Mexico, and Peru.
Streamlined loan application process
Competition, however, is harsh from banks, private lenders, traditional lenders, FinTech companies, and even credit cards. “We compete against the financial world,” but Afluenta has several competitive assets. The first of which is convenience; customers can take a loan 24/7 from their computers or their cell phones. The application process is customer-friendly and speedy. Afluenta can offer attractive interest rates, and finer assessments of borrowers, offering greater access to loans.
Loan Prediction using machine learning
This is where the technology gets in. Afluenta relies on artificial intelligence and machine learning to run its operation for assessments based on data Afluenta collects from its users, and to set interest rates. “There is a balance to be found, the rates need to be attractive for the borrowers, and lenders need a good return,” Alejandro explained.
Contrary to banks, Afluenta goes directly to the source of the money as it connects lenders to borrowers, without the need to hold the money as an intermediary. According to Alejandro, a direct connection is cheaper, and technology helps keep costs down. Afluenta’s algorithms compare the interest rates of the market for the specific segment the borrower belongs to.
Afluenta’s machine learning algorithm protected by trade secrets
Intellectual Property is key to Afluenta. The name was registered in the early days of the company and Alejandro is a fervent advocate of IP protection. The processes Afluenta designs, the codes, the training methodology, the onboarding method, and the assessment algorithms are all protected with trade secrets. Processes and codes are evolving all the time so they cannot be patented, he said. The protection of its IP assets allowed Afluenta to attract investors, Alejandro noted, advising all companies to register their brand at inception.
Founder of the FinTech Association in Argentina and Peru, Alejandro promotes the protection and respect of others’ IP. He set up a code of conduct among members of those associations by which if someone infringes some other member’s IP rights, he/she would be banned from the association. “This is soft protection of our brands, but very effective,” he said.
Starting on his own, Alejandro now has a team of 75 employees. On the future of the company, he said “the most exciting development will be in the upcoming years because the technology is changing quite fast.”
Web 3.0 shaping the Future of FinTech
“Internet 3.0 is coming, and it is fascinating to see what is happening in financial technology.” Three technologies currently cohabit: banking, FinTech, and coming fast the Blockchain technology, he said. “FinTechs were innovating and differentiating from banks because we were more agile, more accurate, faster, but now with Blockchain, instead of connecting people in the same country, we are going to launch tokens usable worldwide,” he explained.
Lenders will be able to get a token in stable cryptocurrency to invest in any country in Latin America and “I believe when we launch we will be the first company creating such worldwide token for single person around the world to invest in loans for Latin American people.”
