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Applying for a mortgage is a time-consuming and disorganized process, requiring manual paperwork. Based in Jakarta, IDEAL simplifies the process with a platform that allows users to compare mortgage products and apply from multiple banks at the same time. The startup has announced that it has raised $3.8 million in pre-seed funding led by AC Ventures and Alpha JWC with participation from Living Lab Ventures and Ciputra Group.
The money will be spent on product development, recruiting and expanding the products. IDEAL plans to eventually add other core loan products and expand to Southeast Asian countries.
The founding team of IDEAL, which started last year, was Albert Surjadaja, Ian Daniel Santoso and Indra Noor Shadrina, with Jeganathan Sethu joining this year. Before starting IDEAL, Surjaudaja was head of operations strategy at digital payment service OVO.
IDEAL Founders Albert Surjadaja, Indra Noor Shadrina and Ian Daniel Santoso
Serjadaja told TechCrunch that IDEAL was launched with the idea that “consumer credit in Indonesia was broken.”
“When used responsibly, credit is a critical component in fueling economic growth. It acts as a multiplier effect in generating value,” he added. It indicates that there is potential. There are several reasons for this, but one key reason is the lack of good and accessible options when it comes to product loans.
According to Serjadaja, traditional retail banks offer a relatively poor digital experience for their customer lending products, making them less accessible. On the other hand, there are P2P lending and BNPL startups, but their products are focused on smaller, more consumer loans.
“We feel there is a clear gap in the market, namely conventional, productive and large-ticket consumer loan products offered on a user-friendly digital platform,” he said.
Surjaudaja says IDEAL chose the loan as its first consumer lending product because of its market potential, citing a study from Bank Indonesia that in 2021, the country’s mortgage industry is estimated at $39 billion, with a CAGR of 17% expected over the next five years. Gen Z and Gen Y are poised to become the primary audience in the home ownership space.
Indonesia’s mortgage income is only 3% of its GDP, the lowest in Southeast Asia.
Serjadaja added that the traditional mortgage process is too manual, too disorganized and takes too much time and effort from customers.
For example, many people lack information about how the mortgage process works, making it confusing. The document submission process is also manual and non-standard with many components and documents containing sensitive information being kept out of security. According to Surjadaja, consumers face a lack of clarity on affordability and availability of different options and an unclear application process, which means they need to contact their agent more often.
The IDEAL digital platform seeks to address these challenges. While mortgages are primarily offered by estate agents, IDEAL allows buyers to 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 costs and fees and includes a direct application that allows users to apply to multiple banks with a single data set and real-time tracking system. IDEAL says its digital system is secure, and reduces human errors and data leaks that often occur in paper-based or messaging-based mortgage processes.
Other features include detailed information on property classes from IDEAL’s developer partners, various mortgage products from banks and IDEAL Compass, a short questionnaire that helps the platform understand what a customer is looking for and compiles monthly payments, tenants and other mortgage information.
The startup currently focuses on primary housing transactions, but plans to expand into secondary housing and mortgage modification/products. It also unveils a dashboard that helps users monitor and manage their loans. IDEAL plans to expand into other major credit products with a long-term vision of entering Southeast Asian markets such as Thailand, the Philippines and Vietnam.
According to Serjadaja, 60% to 70% of Indonesia’s mortgage market is below the secondary housing category. “The difference between fixed and floating mortgage interest rates in Indonesia can be quite large, so our market research shows that Indonesian consumers have a strong interest and desire for an easier way to take out/finance their current loans.” .
IDEAL earns through commissions from banks and property developers for every successful loan application through the platform. It is currently partnered with five banks including CIMB Niaga, OCBC NISP and Maybank and several of Indonesia’s largest property developers such as Sinar Mas Land, Ciputra Group and Agung Sedayu Group. The platform connects to banks through an API to simplify the data collection process.
Some of IDEAL’s competitors include Pinhome, Cermati and Cekaja. Surjaudaja says Pinhom’s business model is asset-centric, providing an end-to-end solution for real estate, from home discovery to home financing. On the other hand, he described IDEAL’s business model as “customer-centric” and leaning towards fintech rather than proptech. Sermati and Sekaja, meanwhile, are financial aggregators that allow users to browse mortgage products from multiple banks, but Serjadaja says they’re not fully digital, don’t provide any contextual information, and still require an online-to-offline process. Check and pre-screen applicants to banks.
In a prepared statement, Adrian Lee, managing partner of AC Ventures, said, “Indonesia’s mortgage debt currently accounts for 3% of the region’s GDP. This is low compared to Malaysia and Singapore which are at 30% or more. If Indonesia could double its borrowing rate to 6% through improved financing, this would provide a $30 billion opportunity. IDEAL’s strong fit team identified a bottleneck in the mortgage industry and brought domain expertise in fintech and real estate to build a mortgage retail store in Indonesia.
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