Just over five years since disbursing its first loan, JMMB Express Finance (JEF) is eyeing even more growth opportunities after scaling the ranks of the microfinancing industry to becoming the third-largest lender behind Island Finance and Courts Ready Finance in Trinidad and Tobago.

The company’s Chief Executive Officer Elson James, who is also JMMB Group’s financial inclusion business lead, believes that given the small pool of players in the microlending space, opportunities to expand abound. In fact, he said by improving operational efficiencies and leveraging technology JEF can become the leading microlender not only in twin island republic but the Caribbean.

A former vice-president at Citibank Trinidad and Tobago, James also served as country manager for Island Finance and regional director of consumer finance for Unicomer, the parent of Ready Finance. He told Jamaica Observer that marrying his experiences in corporate banking at Citi with microlending has worked for him leading the company over the last five years. Yet, he also credits the JMMB brand as a key ingredient for the company’s rise in such a short time.

“The JMMB brand is extremely strong. So I think especially in the space of consumer finance and retail lending, JMMB was born coming out of that sort of financial inclusion focus, so it helped to have the brand behind the business. As well, I think the offering that we offer at JEF — JMMB Express Finance — is something that the population was looking for,” he explained.

Borrowing rates in Trinidad and Tobago also remained low with the country’s central bank holding overnight rates or repo rates at 3.5 per cent. While James believes that this has a small role in the growth of JEF’s loan book, pointing out that all microlending institutions enjoy the same rates, he asserted that the differentiator is the value proposition that the company offers the market.

In a market where there are opportunities for new entrants, the JEF CEO shared that while the company is keen on compliance and KYC principles, it also focuses on the speed of processing loans and understanding the needs of its clients, most of whom are looking for financing of household appliances, among other short-term needs.

“So it’s a combination of understanding the market with the respect to the number of players, but more than just interest rate, what is the value proposition to the client?” James reiterated.

With branches in Port of Spain, San Fernando, Arima, Chaguanas, and Scarborough on the island of Tobago, JEF will be increasing its physical footprint with more brick and mortar outlets, as the CEO conceded that “we see the need for other branches through the length and breadth of Trinidad”. However, he underscored the advantage of technology in onboarding new clients, sharing that the company’s omnichannel platform offers both potential and existing clients the choice of applying for loans and making payments online or in person.

Leveraging technology

Highlighting that a large portion of JEF’s business is conducted either on the phone or online, James credited the company’s digital growth to increased access to technology on account of the falling cost of capital investments over the last decade.

“A lot more companies are offering cloud-based solutions, whereas before, if you wanted to start a business like this, you had to have very large sums of money to have an IT infrastructure. You have a lot of players coming in and they’re using a cloud-based solutions,” he told
Business Observer.

“One of our key pillars at JEF is to continue to drive operational efficiency, and we see that one of the ways of doing that is through technology. Can we collect better using technology? Can we disburse loans better using the technology? Can we understand our clients’ needs better using technology? So it’s really leveraging what’s out there and partnering with entities both in the region and outside of the region to drive that operational efficiency. So [technology is] going to be a key component of the business going forward,” James continued.

In fact, it was because of the company’s omnichannel platform that it was able to manoeuvre through the difficulties of COVID as clients had the ease of conducting business online. Added to this, the lending institution also offered its clients moratoria in an effort to maintain its client base.

Again using the term “marriage”, James said that JEF has been able to combine the strengths of operating as a financial technology (fintech) entity with that of a brick and mortar institution.

“We’re not just seeing it not just in banking but across many industries. Getting that marriage is key because you’ll be able to pull some of the key [ingredients] of a fintech and their efficiency, speed of market and responsiveness to clients as well as taking some of the knowledge from the brick and mortar that clients still want — a place I can go to or a person I can speak to,” he outlined.

He added that with the emergence of predictive models using artificial intelligence, financial institutions should be able to determine payment patterns or measure a client’s creditworthiness using a client’s credit history.

Much of that knowledge transfer has been due to the company’s most recent acquisition of a 19.9 per cent stake in Bayshore Finance, which was finalised in April last year. The associate company provides short-term insurance premium financing to both corporate and retail customers.

“So their speed of approval is even faster than we are. So we saw an opportunity where there was lender that was leveraging technology. They have no branches; all of their loans are done online and they’re literally done within minutes. So there was partnership that we could form. Using technology we are not, that we can learn from them and vice versa,” James disclosed.

Asked if the JEF will be looking to increase its stake in Bayshore, the CEO noted that it is prohibited to do so based on the regulations of the Central Bank of Trinidad and Tobago.

“But there are some cross learnings that both [entities] will benefit from and, of course, hopefully we’ll parlait into a greater profitability for JMMB at this point in time,” he added.

Regional growth

With a loan book amounting to quarter-billion in TT dollars or about US$35 million, James is bullish on similar partnerships in Trinidad and Tobago and the wider region, pointing out that the company is looking for both inorganic and organic growth.

“So we may look at other opportunities at that smaller percentage as well as other markets. Guyana is doing very well,” he informed Business Observer.

Noting that the company sees potential in the new oil-producing Caricom State, James explained that the company is still conducting its due diligence and is aware of the tedium it will have to face to set up an operation in that market. However, preliminary research has shown that the population is demanding unsecured loan products with affordable rates.

With this in mind, JEF has begun having discussions and will soon be meeting with Guyana’s central bank.

“And it’s the same thing in other markets. I think the space is very underserved in many markets, again with the exception of Jamaica. But it’s an underserved market for the unbanked and the underbanked and, therefore, it being a part of the pillars of JMMB, there are other markets that we believe we can go in and add value and bring a strong product to them,” he added.

Looking ahead, the CEO envisions driving growth through increased efficiency and passing on the savings to both clients and shareholders

“So for example, earlier this year we removed all fees from our business. There are no origination fees, no loan fees, not even late fees. There are no fees other than your interest rates. For us, that ensures that we stay competitive but as we become more efficient the client benefits from it. So it allows to now, as a JMMB entity, to say that we’re the only financial institution in the Caribbean that has no fees at all, and we’re looking to do other things that can evolve the business and pass on the savings to our clients and pass onto our shareholders,” James stated.