Prodigy Finance is the first, and only company in the world to operate a truly borderless credit system.
Disrupting the traditional funding market, they provide loans to international students from 150 countries attending the world’s top universities. Their loans are collectively funded by a community of alumni, institutional investors and qualified private investors who receive a financial and social return; while the student borrower gains access to higher education that they might not otherwise be able to finance. Now in their tenth year, Prodigy Finance have helped over 6,874 students with more than $318 million in funding.
Cameron Stevens, Founder and CEO of Prodigy Finance speaks to African Finance and Tech about their ‘borderless’ business model; use of technology to secure and process loans and what they hope to achieve in the next few years.
Prodigy Finance saw success almost immediately. What do you think made it so successful, particularly when lending to prospective students?
We experienced the challenges of funding our overseas education first-hand and decided that international student financing had to improve.
Prodigy Finance is a result of putting customers at our core, understanding them and their needs and then building the business around solving this. This is what has led us to the current borderless credit model, which is available to students from 150 different countries. Our belief is that funding should not be a barrier to education, and that you should be able to get access to financing if you have secured a competitive place at graduate school.
While major global banking brands ‘look’ like international businesses, in fact they are a series of businesses, operating with a local mindset with legal guidelines. This has significant implications for international students looking to study away from their home country, notably when studying at a postgraduate level in business, engineering and law. This group of high potential individuals, who require access to finance for their tuition fees, are currently poorly served by a banking industry that is happy to lend domestically, but struggles to lend overseas. In essence, a potential candidate’s post code is more important to a bank than their future earning potential.
Our risk assessment includes, but is not limited to, multiple elements such as pre-study salary, university acceptance and future income to ensure individual loan affordability; as opposed to only considering historical earnings data.
We pride ourselves on the human aspect of our education loans; it’s a community that brings students, graduated borrowers, alumni and investors together. There are countless opportunities to provide services and assistance, for example, school-specific guides for incoming international students, career services, personal finance help, and global networking events that connect students to alumni. Some of these initiatives are in pilot phase, and will be launched in due course.
Also, for our alumni investors, it means they can select which schools and even classes they can invest in.
What is your loan verification process and how does it differ from other loan providers?
Our main points of difference are that we do not require a co-signer, collateral or guarantor. Our process is 100% online from application through to signature. The application can be completed in under 30 minutes and students can expect to receive a provisional offer within five days.
How do you leverage technology to provide your services?
Technology is at the core of Prodigy Finance. From enabling secure online applications and processing globally, to growing a business with a workforce that is scattered across various time zones. We use technology to scale our infrastructure quickly, with flexibility. We have made use of services that excel at specific tasks such as hosted email, virtualised and managed servers, IP based telephony, videoconferencing and file sharing.
In terms of accessibility, to qualify for a loan, your prospective students have to put a certain amount of money towards their course. How does that affect students from a less privileged background or even those that are exposed to currency fluctuations?
We encourage students to fund their studies from more than one source. At Prodigy Finance, we will provide a loan which is up to 80% of a student’s cost of attendance. (Cost of attendance is the university's official figure for the cost of attending the chosen programme, including tuition, fees, and living expenses).
Access to education, and the funding thereof, is a challenge for students across a range of social-economic backgrounds. We enable the investment in higher education, as our loans provide an opportunity for professional advancement that would otherwise be unattainable for most international students. The majority (83%) of borrowers have no alternative means of financing, and 58% are the first in their families to attend graduate school. Our model is an example of capital being invested with social purpose and providing opportunities to talented individuals.
We only offer loans in hard currencies (USD, GBP, Euros) which have historically been less volatile than other currencies. At several schools in Europe and the UK, we are able to offer USD as well as the tuition currency (GBP or Euros), and the student can choose their preference. Prodigy Finance does not benefit from currency fluctuations, and we communicate the currency exchange risks to borrowers at the time they take out the loan.
Skills shortage is a very big topic in the tech space globally. However, in Africa, providing technology can be life changing. Do you have any programmes that provide easier access or even facilitate this issue by supporting students from Africa to study subjects that can foster growth in the tech sector?
We fully recognise the potential for business to make dramatic improvements in emerging markets, and have seen first-hand how many Prodigy Finance alumni return to their home country to take up positions of leadership and create economic growth. For example, one alumnus started a cooperative for farmers in Zimbabwe after graduating, which made a huge contribution to the local community.
Our model is to focus on helping students and talent reach their full potential by accessing the best higher education degrees in business, engineering, law and public policy. There are some great social enterprises and NGOs working in this space, such as Kano, which donates DIY computer kits to children in emerging markets. Similarly, CodeAcademy provides free online coding clubs, and Theirworld, a British NGO that runs coding clubs for African children.
How does your platform provide support for gender diversity? Do you see different uptakes when it comes to higher education in Africa?
We don’t believe that geographical borders should be a barrier to education. And, likewise, gender should not be a barrier to education either. Both females and males take loans with Prodigy Finance.
What is coming up for Prodigy Finance in the next few years?
Since we launched in 2009, we have helped over 6,874 students from 127 countries to borrow over $318 million.
In the coming years, our objectives include developing partnerships with schools in the US; expanding our supported courses: for example, since April this year we have added 37 more engineering programmes to our offering and refinancing, for domestic students in the US and Europe that are moving onto their second year of study. This will allow them to get a better deal on existing loans.