Mash Group Oyj: Mash gains market share from recent regulatory change in Finland

Customers are flocking to Mash as many lenders are exiting the market, following the law change affecting consumer lending. Mash Group already sees major positive impact on demand as more customers are available at lower cost, applying for bigger loans. To meet the increased demand, Mash expands its funding base by issuing two new bonds, in total EUR 100 million.

The Finnish Parliament, recently approved changes to the Finnish Consumer Protection Act, which included, among others, interest and fee caps. The law came into effect from September 1^st, and according to Mash Group Chairman Tommi Lindfors, the first effects can already be seen. "Mash as a Fintech company as a whole, focused on highly efficient customer acquisition and origination, has been positively affected by the change. Mash has always welcomed regulation as key to a well-functioning financial market. In Sweden, for instance, we are supervised by the SFSA. For our Finnish customer base, especially in our pay-by-invoice services, the changes due to the new law have been minimal. Lending in the Finnish market represents only a minor part of our services nowadays. "

Mash welcomes the law change, which has brought permanently lower fees and interest from the customers' point of view. Mash CEO Gaëtan Van Wynsberghe comments on the effects: "The lower prices have increased the demand for consumer credit, which was probably not the intention behind the legislation. More people are applying for loans and people also apply for bigger loans with longer maturities, as they can afford them with the lower monthly payments. For a smaller group of customers with a higher credit risk, the effect is the opposite. Because of the interest and fee caps, they may be completely shut off from credit, as the allowable revenue does not match the risk for those customers."

"The previous law was not followed up with strict enforcement, which limited its effect, whereas the new law is much more clear on the consequences of non-compliance.", Mr Van Wynsberghe continues. "This clears up the market considerably, as high-interest lenders that rely on massive marketing spend have effectively ceased operations. It leaves the market wide open for responsible, reasonably priced operators like Mash. We can already see a huge increase in demand for our services also because of this. Customer confidence in credit providers is also expected to improve when the "cowboy" lenders have disappeared."

"Mash has had very competitive pricing already for several years, based on the competitive advantage gained from its fully automated, efficient lending platform", CEO Van Wynsberghe states. "Because of this, the recent law change did not require any major changes from us, only some optimisation of our customer assessment and pricing criteria. For instance, the interest cap has only affected less than ten percent of our customers in Finland. For these higher-risk customers, the credit criteria have been further tightened in conjunction with the law change. In the long term, we expect this to lead to a small reduction of overall credit risk."

"Customer acquisition costs are also getting lower, as the high-priced lenders that relied on aggressive marketing have been forced to cease operations. With fewer lenders, the increased demand is concentrated on the remaining responsible lenders. For Mash, demand has increased significantly. Thus, the company can now choose its customers even more carefully, which contributes to a lower credit risk exposure. The lower customer acquisition costs are a major positive effect for Mash. "

The increased demand for bigger loans requires more funding to meet the demand. Mash Group secured EUR 25 million in institutional equity investment in June 2019, and over EUR 60 million additional equity has been raised from early 2018, to ensure a good solid base for more debt funding. The significantly stronger balance sheet is expected to facilitate more and cheaper external funding to fuel growth, aiding the long-term growth and profitability of Mash business. Chairman Lindfors says that the company is issuing two new bonds (to be listed) of EUR 50 million each to complement existing funding vehicles. "We expect growth especially through our pay-by-invoice acquisition channels, working with partners and merchants to increase business volume conversion by leveraging our innovative point of sale payment solution through the partner network. It means we will be able to originate consumer credit at low acquisition cost at an accelerated pace, which in turn will require a bigger funding base. The significantly stronger balance sheet of Mash Group helps to get us more and cheaper external funding to fuel the growth, and to grow our business faster"

According to CEO Van Wynsberghe, upcoming law changes in Poland and elsewhere are also expected to have similar effects, i.e. beneficial to Mash and other responsible lenders. "Regulatory changes in key markets have already proven us right in moving toward near-prime and prime customers with a sustainable business model that is focused on generating high quality portfolios. As a result, we are today largely insulated from regulatory changes in Finland and are well positioned to capitalize on the market opportunity this creates. We are currently experiencing unprecedented demand for our services in all key markets, and are working hard to meet that demand through a bigger funding base. We can pick and choose between customers. In terms of strategic positioning, we are spot on."

About Mash
Mash has been at the forefront of fintech innovation since 2007. We leverage our advanced proprietary algorithms, machine learning capabilities, and automated platform to deliver superior finance and payments solutions to thousands of customers every day. We work hard for a future powered by technology, making every transaction seamless, flexible and worry-free. Today, Mash is one of Europe's leading fintech companies.

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Jonas Lindholm
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