Lakshithe Wagalath, co-founder and chief operating officer at Elfin Market, explains how his platform is revolutionising the credit card industry…
When Elfin Market launched in September 2019, it had one core aim – to provide a fair and affordable alternative to credit cards, using peer-to-peer lending. According to the latest data from the Bank of England, the average credit card interest rate in 2019 was 20.77 per cent, and that doesn’t include commission fees, late fees and additional costs such as balance transfers.
For Lakshithe Wagalath, co-founder and chief operating officer, Elfin Market, this was not good enough.
“Traditional credit cards are very costly and unfair products,” he says. “A lot of people are trapped in long repayment schedules. And we truly wanted to change that.”
Along with co-founder and chief executive Mansour Bouaziz, Wagalath created Elfin Market. It uses P2P lending and technology to offer a much lower representative APR of 5.8 per cent inclusive of fees, while still offering the same borrowing capacity as a traditional credit card.
“Our borrowers have complete freedom over what they do with the money,” says Wagalath.
“They can access their credit lines as many times as they like within their credit limit, and they can make early repayments whenever they want. The money will be transferred to their bank account within seconds and they can use it as they wish. The only difference is that it is much, much cheaper than traditional credit cards.”
There are clear benefits for investors as well. Elfin’s lenders can earn between eight and 12 per cent through a highly diversified portfolio on the platform.
“The minimum investment is £100,” explains Wagalath. “If you just invest that £100, it will be spread across a few hundred borrowers in the platform.”
Diversification is just one way in which Elfin Market manages risk on behalf of its investors. The platform has a very strict credit risk management process, which results in more than 90 per cent of its credit applications being rejected. Since the Covid-19 pandemic, these criteria have been tightened even further, including new affordability checks.
However, even in the midst of a global pandemic and accompanying recession, Elfin Market is not losing sight of its key objective. The platform is still committed to making credit card facilities more accessible, affordable and flexible as possible.
“With our borrowers, we want to be fair and helpful,” says Wagalath. “So we are happy to be able to offer a one- to three-month payment holiday to our borrowers in financial difficulty. That goes along with our message of fairness.”
Before the end of the year, Elfin Market plans to release two new products – a mobile app which allows customers to check their account and make transactions on the go.
The platform is also planning to launch a physical card called the Elfin Card. This will enable borrowers to make payments directly from their Elfin Purse.
“We are different to other P2P platforms because we are not in the usual personal loans business,” says Wagalath.
“We are in the revolving credit business. We are offering something which is flexible and much more similar to traditional credit cards than P2P lending.”
As the country faces the possibility of another credit crunch, Elfin Market is finessing a service that is set to become more vital than ever before.