Credyty: A FinTech Startup That Issues Micro-loans To Students While Securing Them a BRIGHT Future
One of the best ways to learn something is by leaving the textbook behind and actually engaging in the activity being taught. Financial education is no exception. Before we graduate from college and are let loose into the real world, most of us don’t get a chance to really learn how to save effectively and appropriately manage debt. However, in many Latin American countries, this is an even BIGGER problem as many who want to go to college aren’t taught basic financial management or have any credit history with which to secure loans for education. Thanks to a startup out of Boston University’s BUild Lab, this is changing.
Founded by three BU students Juan Tomas Leal, Felipe Garcia, & Marco Paschina and one Saint Joseph’s student Daniel Awad, Credyty is a fintech company that provides micro-loans to Latin American college students through an extremely efficient online process in addition to basic BUT important financial education services throughout the duration of their loan. We had a chance to catch up with one of the founders, Juan Tomas Leal, who shared more about Credyty’s ambitious and admirable vision.
Creating Financial And Educational Access
What Makes Credyty Different From Other Lenders?
Credyty is a fintech company that provides small, low-interest tuition loans to Latin American college students specifically in Colombia for the time being. Co-Founder Juan Tomas Leal addressed how his startup is solving this problem:
“It is very common for students in countries like Colombia to not have a credit score so they can’t get access to loan, so instead we focus on a different set of criteria to approve them. Also applying for a loan through the traditional banking system is an extremely painful and tedious process. One has to submit numerous documents, go to the financing office at the university or bank branch in person, fill out long-forms, and after that, there are often long approval times. With Credyty all the processes are carried out 100% online. A student can apply in less than 5 minutes, with no documents required, and receive immediate approval. “
On average, Credyty’s loans are less than $1k and are paid back in small installments over the course of six months. Students do not have to fill out any paperwork during the application process as everything is done through Credyty’s online platform.
Additionally, the company does not require students to have credit histories in order to qualify for a loan. Instead, Credyty has built out its own acceptance algorithm, collecting key criteria data points such as GPA, academic concentration, and courses taken which are then fed into the internal behavioral algorithm that determines borrower reliability.
All of this is done in a matter of minutes!
Focus on your value proposition and current product, do not try to do 100 things at the same time!
– Juan Tomas Leal, Credyty Co-Founder
Beyond the actual loan, Credyty provides educational workshops and connects students with professional and financial advisers who help them plan for the future, to ensure not just a reliable ROI for the company, but success for students!
How Has Credyty Grown Since Its Launch?
In its pilot phase, Credyty has already issued over 50 loans totaling more than $50k, quick and significant traction largely due to receiving 500+ applications from their two partner universities. The startup reports that 63% of the loans issued to date have been to students who otherwise would have been denied for support from traditional institutions. Credyty is currently working to expand from two to six universities in Colombia and also partners with Covinoc, a large financial institution that bears the financial risk for bank and universities that want to run funds through Credyty’s proven system to scale their program and get more loans to more students.
“We partner with financial institutions and universities who want to give funds through our streamlined platform- we have marketing channels, we have a student selection algorithm, and we have the support services for them to leverage.” –Juan Tomas Leal, Credyty Co-Founder
Students Helping Other Students
What Inspired Credyty’s Creation?
Credyty’s diverse founding team is comprised of two Colombians, one Spaniard and, one Italian student Juan Tomas Leal, Felipe Garcia, Marco Paschina, and Daniel Awad. During a visit to Bogota in 2016, the team witnessed firsthand the lack of financial and educational access that students faced; Leal describing:
“We were confronted with the harsh reality that many Latin American countries live. Going to college, something that was granted for us, was an unachievable dream to many young people in Colombia. I believe that this was the first spark that got the team together to find a solution towards this problem.”
The three BU students returned to their campus and started the university’s Fintech club in order to facilitate conversation around how the problem could be addressed.
“The creation of the club gave us access to different entrepreneurs, faculty advisors, innovation centers- all these people helped us see the different models that could be applied to the problem that led us to determine the best way to tackle the problem was through Fintech.”
– Juan Tomas Leal, Credyty Co-Founder
Over time, the idea for a digital lending platform that also provided education was born. With seed capital from family members, Credyty launched in May 2018 and continues to grow quickly.
Stay true to your mission and business model.
–Juan Tomas Leal, Credyty Co-Founder
What Is The Plan Going Forward?
BU’s BUild Lab has helped the Credyty team by providing office space and valuable mentorship while structuring the initial pilot launch. Leal went into detail about the BUild Lab’s environment and resources positive impact on his startup:
“It is incredibly helpful to have professors walking by that you can ask questions at any time or bounce ideas off the BUild Lab faculty advisors It is also really important to be surrounded by entrepreneurs- to see what they did well, what they did wrong, and look at someone who did a similar thing to ask them what we should take into account. Everyone in the BUild Lab Program shares the same drive and mindset, we all want to help each other to succeed.”
The startup hopes to begin expanding regionally in 2019 to provide students in neighboring countries with Credyty loans and support but also acknowledge the obstacles that expanding to other Latin countries entails.
“The education systems in Latin America countries are all slightly different- Colombia has very short-term loans while in Brazil you can already pay tuition on a monthly basis with the result being longer-term loans. We will partner with financial institutions in those countries- to get the information to scale effectively and maintain quality.” – Juan Tomas Leal, Credyty Co-Founder
Ultimately, Credyty’s founders believe they have the potential to serve 1.25M students in Colombia alone and 18M students across Latin America, an exciting, but attainable goal for the highly scalable business.
“You need to have guts. Get out there; get to know your customer; get to know your competitors; get to know your possible allies. It is never too early to do this.”
-Juan Tomas Leal, Credyty Co-Founder
This Untold Business University Spotlight reminds us to question incumbent processes which may no longer make sense given technological innovation and enhanced ability to measure creditworthiness without established credit histories especially in countries that are underserved where the consumers are left helpless without the proper tools to educate themselves to build a bright future.
Credyty has developed a new approach to evaluating borrower reliability that also includes education so that students aren’t left alone in the dark. Rather than rooting against its borrowers for the sake of profitability. The Boston born startup wants its customers to succeed, thereby creating positive examples of responsible financial management in countries where they may be hard to find. It is disrupting the fintech industry by providing students with a community, and with resources for financial and professional advising, enabling students financed by Credyty to have better professional outcomes when they graduate and a healthier financial future.
How might you be able to redefine the status quo using modern advances? Don’t let the past get in the way of the future! Think hard about how you may be able to improve systems or methods that are often overlooked because they have been around for so long.
This is where you can find tremendous opportunity!
November 12, 2018 | Chaz Hermanowski – Untold Business Content Director