Applying for mortgages is often a time consuming and disorganized process, requiring a lot of manual paperwork. Based in Jakarta, IDEAL simplifies the process with a platform that allows users to compare mortgage products and apply to multiple banks simultaneously. The startup announced today that it has raised $3.8 million in pre-seed funding led by AC Venture and Alpha JWC, with participation from Living Lab Ventures and Ciputra Group.
The financing will be used for product development, hiring and expansion of its products. IDEAL plans to eventually add other major credit products and expand to more Southeast Asian countries.
The founding team of IDEAL, which started last year, consists of Albert Surjaudaja, Ian Daniel Santoso and Indira Nur Shadrina, with Jeganathan Sethu joining this year. Before the launch of IDEAL, Surjaudaja was former head of operations strategy at digital payment service OVO.
IDEAL founders Albert Surjaudaja, Indira Nur Shadrina and Ian Daniel Santoso
Surjaudaja told businesskinda.com that IDEAL started “with the thought that consumer loans in Indonesia are broken.”
“Used responsibly, credit is an essential part of driving the growth of economies. It acts as a multiplier effect in generating value,” he added. “With that in mind, Indonesia has one of the lowest credit-to-GDP ratios in the region, meaning there is a lot of economic value potential that can be unlocked. There are a number of reasons for this, but one major reason is the lack of good, accessible options when it comes to lending products.”
Surjaudaja said traditional retail banks provide a relatively poor digital experience for their consumer loans, making them less accessible. On the other hand, there are P2P loans and BNPL startups, but their products are aimed at smaller, more consumer loans.
“We feel there is a clear gap in the market, which is conventional, productive and larger consumer loan products offered on an easy-to-use digital platform,” he said.
Surjaudaja says IDEAL has chosen mortgages as its first consumer loan product because of its market potential, citing Bank Indonesia’s 2021 research that says the country’s mortgage sector is valued at $39 billion, with a projected CAGR of 17% in the next five years. Gen Z and Gen Y will become the main target audience in the homeownership sector.
Indonesia’s mortgage penetration is also just 3% of local GDP, one of the lowest in Southeast Asia.
Surjaudaja added that the traditional mortgage process is very manual, highly fragmented and takes a lot of time and effort from customers.
For example, most people have no information about how the mortgage process works, which makes it confusing. The document submission process is also manual and non-standardized with multiple parties involved and documents containing sensitive information are handled without security. Surjaudaja said consumers suffer from a lack of transparency in rates and availability of various options, and an opaque application process that means they have to contact their agent multiple times.
IDEAL’s digital platform tries to solve these challenges. Where mortgages are currently mainly offered by brokers, IDEAL lets buyers choose their own mortgage products. It also has a feature called IDEAL Checking that allows people to check their credit instantly.
It helps users choose a mortgage by calculating fees and installments, and also includes an instant application system that allows users to apply to multiple banks with a single set of data and real-time tracking. IDEAL says its digital system is secure and minimizes human errors and data leaks that often occur during paper or messaging apps mortgage processes.
Other features include detailed information on real estate units from IDEAL’s development partners, various mortgage products from banks and IDEAL Compass, a short questionnaire that helps the platform understand what a customer needs and a simulation of monthly payments, maturity and other information about a mortgage produces.
The startup is currently focused on primary housing marketing, but plans to expand into secondary housing and mortgage refinancing/acquisition products. It will also launch a dashboard that will allow users to monitor and manage their mortgages. IDEAL also plans to expand into other key credit products, with a long-term vision to enter more Southeast Asian markets such as Thailand, the Philippines and Vietnam.
Surjaudaja said that 60% to 70% of the Indonesian mortgage market falls under the category of secondary housing. “Our market research indicates a strong need and demand from Indonesian consumers for a way to easily take over/refinance their current mortgage, as the gap between fixed and variable mortgage interest rates in Indonesia can be quite large”, with a difference of up to 10% .
IDEAL earns money through commissions from banks and property developers for every successful loan application through the platform. It currently partners with five banks, including CIMB Niaga, OCBC NISP and Maybank, and some of Indonesia’s largest real estate developers such as Sinar Mas Land, Ciputra Group and Agung Sedayu Group. The platform connects to banks via APIs to make the data collection process easy.
Some of IDEAL’s competitors are Pinhome, Cermati and Cekaja. Surjaudaja says Pinhome’s business model is more real estate focused and offers an end-to-end solution related to real estate, from home discovery to home financing. On the other hand, he describes IDEAL’s business model as ‘customer oriented’ and leaning more towards fintech rather than proptech. Cermati and Cekaja, meanwhile, are financial aggregators that allow users to browse mortgage products from multiple banks, but Surjaudaja said they are not fully digital, do not provide contextual data, and still require an online-to-offline process, with no prior credit score. -checking and pre-filtering applicants at banks.
In a prepared statement, AC Ventures managing partner Adrian Li said: “Indonesia’s mortgage penetration currently stands at 3% of local GDP. That’s low compared to Malaysia and Singapore, which are 30% or higher. This represents a $30 billion opportunity if Indonesia can double its mortgage penetration to 6% through improved financial access. IDEAL’s strong team identified a bottleneck in the mortgage sector and brought in domain expertise in fintech and real estate to build a one-stop-shop for mortgages in Indonesia.”
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