Powered by the crowd: Interview with Vincent van den Noort

Continuing our Conversations series we feature Vincent van den Noort, founder of peer to peer mortgage providers, Jungo. Alexander Vencken caught up with him to learn more about Jungo’s plans to disrupt the mortgage market with its peer to peer model. 

Let’s start with a short explanation of what Jungo is.

Jungo is a people to people mortgage. We allow private investors to invest directly in Dutch mortgages, for instance people who want to help their friends and family get an affordable mortgage. We want to create a win-win situation for all; give the homeowner a low interest rate on their mortgage and at the same time give the investors a good return on investment. Our motto is: A shared interest brings better rates.

Technology has made it possible to bring together people that share the same interests and goals. This is the beauty of the collaborative economy.

You claim that each mortgage that is requested will be issued?

We believe that the “traditional” crowdfunding model can’t be applied directly to mortgages. On many platforms you run your campaign for 30 or 60 days, and after that you’ve either succeeded or failed. For someone buying a house, this would mean an incredibly stressful time. Not something we would want for our customers.

So we take a different approach. First we do a thorough credit score to see if you are able to apply for a mortgage, not only for our sake but also to protect the customer. Then, if we accept you as a customer, we guarantee you will receive your mortgage. So far, the Jungo mortgage is quite similar to a traditional mortgage. The interesting part happens next.

After we’ve accepted you as a Jungo customer, you can start your campaign for friends & family. With Jungo, the crowd can join in up to 20% of the mortgage. The more people join in, the better the interest rate on the loan. And there is good reason for the private investors to join in. Not only are you helping someone, it’s also a profitable investment with a relatively low risk. In a time when interest on savings is at an historic low, this offers a great alternative.

Can you share how much the difference in interest is for your users?

We’re aiming for the lowest interest rate in the market. At the moment I can’t give you real numbers because we are not live yet. Of course, the more crowd you attract for your campaign, the better your rates will be.

Is it your goal to increase the crowdfunded part of the mortgage?

The top part of the mortgage is the most attractive for private investors, that’s why we’re starting with a ratio of 80% for institutional investors and 20% for the crowd. Of course, these numbers can be varied to different ratios. We think it’s not very attractive for private investors to invest in the lowest risk part of mortgages. This has a low interest rate and is usually a loan for 30 years. That is better suited to institutional investors such as banks, pension funds and insurance companies.

I also believe that a large part of the crowd will get involved for other reasons than profit maximisation. Younger generations are interested in the idealistic argument. Banks are impersonal and focus primarily on making a profit. I want to show that there are actual people on either side of the business, that it’s about helping each other. I want people to realise that when you make 0.5% more profit it means that somebody else has to pay 0.5% extra. Our underlying ambition is to show the human side and connect people with each other.

How is the alternative finance market developing?

The market in the Netherlands for alternative finance is picking up speed, almost doubling every year. It’s good to see that the market is maturing, although we’re still dwarfed by the growth in the UK and USA. Many of the current platforms focus on SME loans, and unlike the Anglo-Saxon countries we see very little p2p platforms focussing on real estate. That’s where we want to play and make a dent. We’re the first platform for people to people mortgages in the Netherlands.

At Claro we see a shift from a world where banks expect their institutional authority to equate to trust towards a world where trust is developed based on shared interests and experiences. Can you elaborate on the statement you’ve made about shared interests and shared trust?

This shift is extremely evident we see it happening everywhere. One of our core values is to be true and transparent about everything we do. This creates a strong trust relationship between our users and Jungo. The other day I was at a presentation of Indiegogo, the crowd funding platform. A sceptic from the audience asked the speaker whether it was possible to trust the people on their platform because Indiegogo doesn’t control their users. His reply was spot on: “If I would want to swindle somebody I would take him out to a private dinner, fill him up with wine, make sure he doesn’t talk to anybody and then make my move. With Indiegogo everything is out in the open. Thousands of people can see what is going on making it almost impossible to swindle them, the network creates trust.”

This is what we aim to achieve at Jungo. We want to be as open and transparent as possible because it evokes trust.

Besides the shift towards shared trust, which other needs or expectations of digital natives are you responding to?

We see that an increased connectedness between people is becoming more important for this group. We also see that sustainability and doing things with a purpose is playing a larger role in the choices that they make.

From a technological perspective it is clear that mobile is the way that people consume information and live online. People expect things to immediately when they want it, and with impeccable customers service.

We need to respond to these trends, just as every startup that wants to succeed. You need to excel in the details, make sure that every experience is positive. This is something that most banks don’t have in their DNA and why you see so many new FinTech startups. I was discussing this with the founder of another Dutch FinTech startup over coffee. Most people don’t have high expectations of traditional banks. If you create something that works without hassle you’re already exceeding expectations. Startups understand that you need to excel in every part of the customer journey and are now starting to raise the bar.

How does this translate in the service and experience Jungo offers?

We find it very important to react as fast as possible to customer questions in a positive way and take away any concerns the customer might have. You can also excel in the small details and make the experience as personal as possible. We can’t share it yet, but we have a couple of nice surprises up our sleeve for our customers. This doesn’t necessarily cost a lot money and effort but creates such a positive relationship with your customer. Our goal is to understand which needs, big or small, we can serve to create a top customer experience.

More and more startups in the FinTech world are nibbling away at the feet of the traditional banks with better products and services. However, there are not many startups that create entirely new products and services. What’s your view on this?

In the FinTech world a lot of the people that start a new company come from the banking world. To be able to create entirely new services, you need to be able to think out of the box. When you bring people with different backgrounds together with bankers these synergies can lead to new things.

Peer-to-peer lending is an new way of banking, but actually it goes back to the initial idea of what a bank should be: an institution that brings people together and supports and serves them in their financial needs without a high profit margin on the transaction. We fully believe in this transparency and directness of doing business.

How important is the role of design in this? How can your UI and UX help you differentiate?

I’m a user experience designer at heart, so obviously design plays a huge role in everything we do. With every design decision we focus on the needs and drivers of the user. An example of the new player that understands this perfectly is Bunq. They focus on how you interact financially with your friends. From there they design services such as easy to set up shared accounts. Simple Bank from the US also came up with a nice concept, they tell you how much money you have left to spend instead of how much there is in your account, taking expected bills into account.

People see banking as something grey and boring, design plays an imperative role in making these experiences more fun. We want to bring small pleasurable experiences to every step in the journey. A fun experience is in itself already an incentive for the user to return and use your product.

How do you do your user research, how do you learn about the needs of your users?

We do a lot of desk research, a lot of reading. And of course we take our research out of the office, talking to prospective customers. This helps us a lot with finetuning the concepts, but the only real way to learn about your user is to make a first version of your product, throw it out there and learn from how the user interacts with it. We have created a number of prototypes and persona profiles and are trying these out with test audiences. We’re planning on launching soon, and this will be the proof of the pudding. We’re really looking forward to it.

This seems to be quite tricky for FinTech startups to do this, after all it is your users money that you are playing with.

You need to make absolutely sure that safety and security is perfect. We have put a lot of effort in creating a legal structure that protects the rights of our users and we’re working with highly experienced partners with proven track record. We take this extremely seriously, and I can safely say that we’ve done everything we can to ensure our customers are safe.

We will be experimenting with the user experience, building on the feedback we get from our users. Still, we are playing in a highly regulated market. This makes it a slightly more challenging proces to make quick changes. When we started we quickly found out that you can’t just go and try out stuff. You need to really think about how to design your MVP. It is a challenge to balance the urge to experiment and launch quick prototypes with the compliances of the AFM and your users expectations and trust.

To use a great Dutch expression: “it’s like walking on eggs”. You need to tread lightly and safely. And amazingly enough the traditional institutions such as banks and insurers still maintain the highest levels of trust with the public, even after all the mess they have made in the past.

True, a big challenge for FinTech startups is that people are still more willing to trust their income and savings to a bank than to a startup.

I think this is will change though. Yes, trust is incredibly important. We think you can build the same level of trust, without traditional offices but instead with a well-designed online portal. From interviews with customers , we know that many people still prefer to visit an advisor or other intermediary. This is why we have built strong ties with a large network of advisor and intermediaries who will eventually sell our story to the customer. Delivering on our promises will lead to them telling the customer that we are a trustworthy party. This is just one example of the ways that we want to win the consumer’s trust.

Interesting. It seems that these partnerships are pretty vital for your business to flourish.

Exactly. In the Netherlands there is an innovative online mortgage advice software package for advice offices and intermediaries called Findesk. I’ve helped develop this software so I know the product and the people pretty well. Jungo can be very easily integrated with advice software. That way we can allow intermediaries to offer the Jungo mortgage to their customers. We will also develop tools to help advisors to tell our story.

There are also a number of online mortgage advice portals such as eyeOpen or Hypotheek24. They share our ideas about financial services and are looking towards the future. These and many more interesting parties are developing user-friendly and online financial services. It is a great development and these are people we love to work with.

What are important things to keep in mind for corporates that want to form partnerships with startups?

They have huge amounts of knowledge that they can bring to the table, but they should not cuddle the startup to death, so to say. Many startup ideas in these big organisation strand because it’s too hard to integrate these innovations into the organisation and the (often legacy) IT. I think that the successful partnerships are the ones where the startup is completely disconnected from the mother-organisation and can innovate without any interference.

It is also interesting to see that sometimes corporates let startups develop for a long time and then just cancel the project because of shifting priorities. Or sometimes initiatives fail to integrate with the existing organisation, so the project is dropped. That’s cash being poured down the drain, even though the concept itself might have been viable.

An issue of being too big to fail?

Exactly, but eventually you will see the winners separating themselves from the losers. Even with the multinational corporations and banks. In the Netherlands you see that ING is establishing itself as a technology company, a good start especially because they are one of the first to make this shift.

There has to be a shift in mind-set. I read an interview where a banker stated that the startups are doing just small parts of what a bank does and that they aren’t really competitors because his bank does everything. This is exactly the problem. Users are mixing and matching all the different services themselves, but what if you get a service that can glue all these small parts together? Users want to be able to tailor their financial services to their personal needs and a large offering of startup makes this possible. A bank that does everything but not one thing properly and up to the new standards will fail to address these needs and expectations. And eventually, if they don’t adapt they’ll fail.

On that note, Vincent, I want to thank you for a great conversation. Looking forward to the launch of Jungo, the best of luck to you!

 

This post was originally published on Claro Partners’ blog, Disruptive Shifts.

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