Automated Debt Collection and Its Success

For decades (centuries, really) lending in Japan has relied on personal guarantors and introductions rather than objective credit scoring. This startup is changing that. Before starting Credit Engine, which provides credit scoring, automated approvals, and other services to mega-banks and other financial institutions,  Sei Uchiyama founded an online lending startup to ensure he understand this market from the bottom up. Credit Engine currently automates everything from loan approvals to the collection of delinquent and non-performing loans, and its already starting to change finance in Japan. Sei and I talk about the future of finance in Japan and the surprising way competition between FinTech startups and the banks is likely to play out. It's a great conversation, and I think you'll enjoy it. Show Notes How much of the loan process can a startup be involved in How the mega-banks are experimenting with this technology The post-tsunami rescue micro-finance fund Why pivot from direct lending to financial services Why lending fintechs startups have trouble raising funds in Japan How real-time credit scoring will change consumer behavior in Japan Is Japan really "over-banked" and what that means for innovation Japanese mega-banks' reactions to financial innovation How automated debt collection improved results by more than 1000% Are the biggest FinTech opportunities in developing or developed markets? Mega-banks' secret weapon in competing with startups How easing labor protections would help Japanese employees Links from the Founders Everything you wanted to know about Credit Engine About LENDY the loan company they operate Connect with Sei on LinkedIn Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Japan has always had a, well, let's call it a “conservative” attitude, towards consumer borrowing. Credit card balances are generally paid in full at the end of the month. Most household purchases are saved for rather than financed and outside of a mortgage, debt is generally seen as a bad thing. In fact, rather than using consumer credit scores, most Japanese lending still relies on introductions and personal guarantees. But Sei Uchiyama, the founder of Credit Engine, is changing that. Over the past few years, Sei, has both started a new lending company and partnered with some of Japan's largest banks to streamline and automate loan approvals and issuance. And he and the team have even developed an automated system for collecting non-performing loans that outperforms traditional methods. Now Sei and I talk about how faster and simpler access to credit in Japan might change things for both good and for bad, what it's going to take to truly disrupt financial markets and whether that will turn out to be a good thing and the differences between Fintech's startup strategy in developed and developing markets. But, you know, Sei tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we are sitting here with Sei Uchiyama, the founder and CEO of Credit Engine who's providing turnkey lending solutions to financial institutions. So, thanks for sitting down with us. Sei: Thank you very much for the opportunity talking here. Tim: So, I explained really briefly what Credit Engine does, but I'm sure you can explain it much better than I can. So, what is Credit Engine? Sei: So, Credit Engine is the online lending platform providing the loan origination system and also the collection system for financial institutions, including banks and non-banking financial institutions. Tim: I understand it's a full service system. You provide scoring automated approvals all the way through processing and collections, right? So, that's quite a lot. So, tell me about what types of loans are you originating? Sei: So,