As one of Australia’s fastest-growing fintechs, Jacaranda Finance is powered by digital technology but the challenge it addresses is a very human one: how to provide responsible credit solutions to individuals whose chequered financial histories preclude their borrowing from traditional lenders.
Each year, tens of thousands of prospective Australian borrowers find themselves in this category, typically as a result of an adverse life event or a significant setback, such as a family breakdown, ill health or over-extending themselves financially.
With sub-500 credit scores, they’re unable to obtain personal loans or credit cards from major banks. Consequently, they can be easy prey for payday lenders or wage advance services, should they require access to a lump sum unexpectedly.
Spotting an Opportunity
When these borrowers found themselves back on the road to creditworthiness following a financial setback, it was unclear where they could turn to for personal finance. Despite being on a path to rebuilding their credit, their credit scores were still too low to be considered by traditional lenders.
For millennial entrepreneur Daniel Wessels, this represented a gap in the financial services market – one that he was determined to fill. He set out to target creditworthy borrowers who were committed to rebuilding their credit scores, helping them avoid last-resort options such as payday lenders.
For millennial entrepreneur Daniel Wessels, their lack of worthy options represented a gap in the financial services market – one he was determined to fill: target creditworthy borrowers who are committed to rebuilding their credit scores.
Upon returning to Australia in 2013, following a stint in the UK establishing a digital lending operation, he began working on a plan to offer marginalised borrowers a better alternative, one that would help them on their journey back to mainstream borrowing.
The result was Jacaranda Finance, an online-only lender that prides itself on offering fast, fair and responsible personal loans whilst maintaining a strong compliance culture.
The company’s name is a homage to the picturesque, purple blossomed trees that line the streets of Harare, the city where Wessels spent his childhood before emigrating to Australia. Jacarandas are also commonplace in Brisbane where Wessels founded the company in 2014 as a 24-year-old in typical shoestring start-up style, in the family home with help from his younger brother.
The Power of Technology
The company’s self-developed loan processing platform harnesses the power of open banking to assess online applications and provide customers with outcomes in 60 minutes or less. Once a loan is approved, funds are remitted to the applicant’s bank account instantly.
Loan sizes range from $1000 to $15,000, with repayment periods of up to 36 months.
Rates and terms vary, according to the borrower’s financial position and creditworthiness, but are lower than those offered by ‘cowboy’ payday lenders.
Loanbook debt funding is sourced from Zenobia Capital, a boutique investment management and advisory business which provides high net worth individuals with access to fixed income investment opportunities
A Winning Formula
It’s a business model – and a business proposition – which has resonated with borrowers and sophisticated investors alike. Nine years after its inception, Jacaranda has a $57 million loan book, an enviably low default rate and a stellar name for ethical, straightforward dealing.
Late 2021 saw it invest in its first television advertising campaign, complete with a catchy slogan that perfectly encapsulates the company’s ethos and commitment to its customers: ‘Jac’s got your back’.
Ongoing success has netted Jacaranda a string of laurels. In addition to being a four-time finalist in the Australian Small Business Champion Awards, it was named Financial Services Champion in 2019 and won ProductReview.com.au’s 2020 Award for Personal Loans. Last year, the company was listed in The Australian Financial Review’s Fast 100; a who’s who of the country’s fastest-growing businesses.
Meanwhile, Wessels’ vision, acumen and determination to shake up the status quo have won him the Business News Australia Brisbane Young Entrepreneur Award three times, most recently in 2020.
Resting on his laurels, however, is not an option for Wessels, who has ambitious plans for Jacaranda’s future.
This year, he plans to branch out, with a line-of-credit product and a suite of digital self-help tools for applicants who are unable to meet Jacaranda’s loan approval criteria at the time of application. Putting the personalised tips and tricks the tools generate into practice is a sure-fire recipe for improved financial health in the long term.
International expansion, to New Zealand and South Africa initially, is also on Wessels’ To Do list for Jacaranda, as is doubling the size of its loan book, to $120 million, by 2023.
Passion, purpose and persistence are what make it possible to turn big goals like these into reality and the young team Wessels has amassed possess all three in spades. Will they continue to forge a path for other Australian fintechs to follow in 2022 and beyond? It’s definitely a case of ‘watch this space’.