CEO Sibtain Jiwani banks on addressing information asymmetry to help consumers find the smartest choice.
CEO Sibtain Jiwani banks on addressing information asymmetry to help consumers find the smartest choice.

SmartChoice is a supermarket for financial products. Whether you want to decide which credit card is suitable for you or what insurance policy best fits your needs, this startup claims to be your one-stop shop.

The way it works is you go to their website, select the financial product — currently includes credit cards, car loans, insurance, takaful plan, broadband — and select your filters. Let’s say you want a car loan, all you have to do is enter the vehicle model, installment tenure and down payment, and bam! The system will show you a list of plans which you can apply for directly through the website.

Obviously you will have to fill in your identification, contact and income details after which a SmartChoice.pk agent will contact you for proof of income and other documents. Once all of this is done, they will forward the application to the bank that will then process it and decide on the fate of your car.

In the entire process, the company gets access to a lot of your personal data and Sibtain is very clear about the privacy policy: no external use whatsoever.

Simply put, SmartChoice is a price comparison website that gives you the best rates from a number of market players. How? So far, they have stuck to only displaying results from partner organisations from whom they get direct quotes.

And Sibtain has been rather conservative about the organisations he teams up with. While around five banks are good enough for a start, many of the biggest names, like Habib Bank and United Bank, are still missing. Isn’t the credibility of a supermarket undermined if it doesn’t display the most notable brands? To Sibtain, the answer is a definite no.

“These big banks already have a large enough customers base and find it difficult to even lend to the existing customers. So even if we get them on board, they would hardly be approving loans through us,” he explains. “On the other hand, our partner banks are aggressively lending so there’s a better approval rate and more money for us,” he adds.

But Sibtain believes the role of SmartChoice goes beyond being a supermarket. “In financial products, there is a need for human interaction while making the right choice. And that advisory role is where I think is our biggest strength,” he says.

This is not e-commerce though: in financial products, the gap between the willingness and ability to pay is rather wide, with approval rates for loans in single digits. Lack of credit scoring makes the task even more difficult. So, what then? “The State Bank is working on some mechanism for credit scoring but that will take time. Until then, we are trying some collaborations with banks to streamline the process,” Sibtain says, without disclosing what exactly is in store.

While the website does have a number of financial products, insurance seems to be their bread and butter. “We started out with insurance so we have a consolidated position in it: there are more partnerships with insurance companies and we have only recently started expanding into other areas,” says the CEO.

Sibtain realised the need for such a portal when he himself was ripped off while buying a car insurance policy. Soon after its launch in end 2016, the company raised seed money and has been bleeding ever since. Now it wants to go for the first round of funding and is looking for the right investor. “We have to expand our tech and marketing so that’s where we will be focusing if we secure money,” says the CEO.

Like any online aggregator, it is free for consumers; so how does SmartChoice make money? On every sale, the startup charges the supplier a certain cut. Other than that, there are paid marketing plans in offer that let companies be featured on the top.

Lately, this industry has garnered much interest with KarloCompare and Mawazna also looking to make gains. But Sibtain is not perturbed, claiming that his position is in no imminent danger in the near future. While that might sound arrogant, his words are substantiated by the traffic SmartChoice.pk attracts – twice compared to other two players combined.

But rather than comforting Sibtain, this should in fact worry him: monopoly in a tiny pie is far worse than a smaller share in a bigger market. Even though financial inclusion is on a steep rise, the current market size is too small, let alone the online market. And until that happens, the startup has found itself another niche: the Pakistani expats. “We have a significant demand from Pakistanis abroad flying their parents out of the country or want to get them a car,” he shares.

What exactly is the overall market potential though? For starters, just the auto financing last year hit Rs193 billion while the underwritten insurance premium exceeded two billion dollars, and the CEO feels his startup is well-suited to grab a sizeable share. “We are targeting 7-10pc of the market by the next couple of years,” Sibtain notes.

SmartChoice wants more than to simply digitise the market for financial products though. “The current industry is very old school with complex procedures and products and our model can only work if we simplify both,” he says. How? Through innovation. “We are building our own products with financial institutions, such as a life insurance policy valid for a particular term. After that, we plan to enter the mutual funds arena,” the CEO shares. Let’s see whether his smart choices reap results or not.

The writer is member of staff:
m.mutaherkhan@gmail.com
Twitter: @MutaherKhan

Published in Dawn, September 23rd, 2018

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