How to make money in uncharted territory: link banks to stores

This particular business model is already a pattern in the West: consumers go to a store that sells household devices, furniture or construction materials, decide what exactly they want to purchase, sign a set of documents and … take the product home.
No queuing at the banks, no down payments. Also, the customers do not pay bigger interest rates to the store than they would pay to a bank. How does that sound? Add a nice fat profit for the intermediary and we have a business that’s too good to be true.
Still, it is perfectly possible. How? Thanks to a consumer finance company, which operates as a transmission belt between the parties involved in the deal: attracts money from the banks, then loans the consumer, who can thus pay for his TV set, or even his dream vacation. The consumer benefits from fast procedures and good rates, compared to the stores’ traditional sales in instalments. The consumer finance company gains from the commissions paid by the stores (for the sales), by the banks (for the loans) and by the consumers (for the acquisition).
The business is a huge success in the West, also due to the involvement of heavy-duty names such as General Electric and AIG, both with powerful consumer finance divisions. In Romania, high inflation is to blame for the absence of this system so far. However, two investment funds (Oresa Ventures and Danube Fund) and a Romanian businessman – Florin Andronache, encouraged by last year’s boom in instalment plans, launched the first consumer finance company in Romania this month: Credisson.
Swedish fund Oresa, Greek fund Danube Fund and Florin Andronache are the shareholders of store chain Flanco, one of the companies that fully benefited from the boom in instalment plans in the past year.
“A consumer finance company was the next logical step, which we have considered ever since we first invested in Flanco (in 1997, i.e.). We are likely to release financing for acquisitions worth $100 million this year,” Cornel Marian, investment manager with Oresa Ventures (owner of 48% in Credisson) told Ziarul Financiar.
According to Cornel Marian, the company will be a hit because the funding decision will be made very fast and Credisson will support acquisitions in instalments for several product categories, not only household devices or furniture.
“There will be a broad range of products and we will not stick to electronic equipment and household devices. We will gradually come to have representatives in most retail chains in Romania and people will be able to purchase things practically on the same day the decision is made,” Marian stated. laurentiu.ispir@zf.ro