CEO of MPOWER Financing, a FinTech Company Facilitating Educational Loans, Shares Business Strategy
MPOWER financing, a global provider of education loans, recently secured a $ 100 million equity investment. The new funding is in addition to the $ 60 million MPOWER raised earlier this year from Capital management of Tilden Park who also participated in the current round with ETS strategic capital.
The other investors were King Street Capital Management, Drakes Landing Associates and Pennington Alternative Income Management.
We recently connected with Manu Smadja, CEO of MPOWER financing, which is a public benefit corporation with a stated mission to âreduce financial barriers to international educationâ. The company is headquartered in Washington, DC, with sales offices in New York and Bangalore, India.
The firm was created by Manu Smadja and Michael davis in 2014, who both participated INSEAD Paris where they first met. Our conversation with Manu Smadja is shared below.
Crowdfund Insider: You mentioned that you are using your cross-border lending platform, big data, and global infrastructure to fund international and DACA students in North America.
How did you identify this as a key requirement and what are some of the long term benefits your organization has been able to provide?
Manu Smadja: MPOWER Financing’s mission is to remove the financial barriers that many promising students around the world face in attending school abroad. International and DACA students simply don’t have access to the kinds of programs that American students can take advantage of, including federal student loan grants, grants, national scholarships, and more. In addition, they are often excluded from many available private loan options due to a lack of national credit history.
We apply the latest technology and processes to fulfill this mission, ensuring that we can help as many students as possible in the most transparent way possible. This includes examining a variety of different data sources as well as projecting the potential for future earnings to determine an applicant’s long-term credit risk.
We also understand that funding is only part of the equation. We provide career advice and additional resources through our Path2Success program, which helps our students prepare for the unique challenges they may face when it comes to entering the workforce. This, in turn, leads to significantly better credit scores and lower than average default rates.
We are constantly rethinking the way we use technology to transform our business. We are currently exploring machine learning to help identify trends and patterns in customer support, which will help us better respond to student questions and challenges.
Crowdfund Insider: Your website says people can ‘fund their dreams on their own’. Applicants can apply for your co-signer loans and scholarships to study in the United States and Canada. How does your Fintech platform make this possible?
Manu Smadja: Unlike traditional financing options available to international students and DACA (usually physical banks in the student’s home country), MPOWER loans do not require a co-signer or collateral for approval. Our approval process is also not based solely on credit history. Instead, we’ve built a proprietary algorithm that takes into account the potential for future earnings and analyzes disparate data sources, such as work history and credit history at home and abroad.
This model ensures that highly promising students have access to education without placing an undue financial burden on their families. MPOWER loans are approved instantly and are provided at competitive interest rates.
By merging and assessing the many factors that will contribute to their success and creditworthiness, we enable promising students who are excluded from the traditional lending process to fund their higher education efforts in the United States and Canada.
Crowdfund Insider: You noted that you are a welfare society founded by international students for international students and your mission is to “make socio-economic mobility without borders”.
We now live in a world characterized by rapid globalization and technological advancements in telecommunications, but some processes, such as obtaining loans, are still carried out inefficiently with existing platforms.
How can Fintech improve this process from the perspective of learners and organizations providing education?
Manu Smadja: Our global financial systems have largely failed to keep pace with innovation seen in other sectors of the consumer economy. While online applications and accessibility may be more common, especially due to the pandemic, the back-end systems that support these technologies are cumbersome and often outdated. Typically, the first option for many international students to finance their education is through traditional brick and mortar banks in their home country. Not only can the loan process take longer, the majority of these lenders still use conventional credit mechanisms to determine eligibility.
Since our founding, we’ve been committed to rethinking and reshaping the way international students finance their education. This includes removing prohibitive barriers, such as requiring a collateral or having a co-signer. Using the data and our proprietary algorithm, we get a more detailed and complete financial picture of each applicant to determine if they are a good candidate for a loan.
Naturally, our model breaks down barriers to financing, while ensuring that every transaction is financially sound and poses no credit risk to our business.
Crowdfund Insider: You’ve processed over $ 2 billion in loan applications. You have also supported over 190 countries of citizenship as well as over 350 American and Canadian schools.
How do you leverage financial technology to speed up the loan review process? Does your software use AI or machine learning algorithms to improve the overall process?
Manu Smadja: We strive to speed up the approval and processing process, but the process must be grounded in precision. We recently launched our Instant Offer product, allowing a student to verify eligibility in 30 seconds and apply online in under 30 minutes. Based on the information we collect; we are able to provide conditional loan offer in real time.
Crowdfund Insider: What are your plans for this year and beyond? What technological improvements do you plan to integrate into your existing platform?
Manu Smadja: In 2021, MPOWER raised a total of $ 160 million, including the $ 100 million in equity on July 13. These funds are used to scale and automate our operations, allowing us to help more students.
While many companies would use such an investment to expand their product offering, we want to stick with our core offering: loans for promising students and tools and training to help prepare students to enter the marketplace. work. It means investing in our people and our technology.
Crowdfund Insider: Earlier this year, MPOWER partnered with Sallie Mae to expand access to higher education, especially for international and DACA students.
Please let us know your goal of leveraging these strategic partnerships to provide better services.
Manu Smadja: We’re always on the lookout for organizations to partner with, especially when they link funding to a student’s dreams of pursuing higher education. Partnering with Sallie Mae helps fill the gaps seen in traditional loan services, providing private credit-based loan products that students can apply for with an eligible U.S. citizen or permanent resident co-signer. When a co-signer is not available, MPOWER works with Sallie Mae and leverages their proprietary data and technology to underwrite highly promising international students.
We look forward to partnering with more lenders to help more students achieve their educational goals.