Pawn industry and prejudices
"The whole world is paying attention to the World Cup, and nobody cares about the financial hardships you are facing. Come to F88 and you will be offered loan in just 15 minutes." - The slogan of the first-ever friendly and professional pawnbroker chain in Vietnam.
The idea of F88 came to Phung Anh Tuan, F88's CEO, in 2011 when he realized the huge demand to borrow unexpected and small loans from friends. Meanwhile, it takes time and there are difficulties to borrow loans from banks.
It is estimated that about 30,000 pawnbrokers are under operations in the country but none is well-organized and especially the concept of pawnbroker chain has never appeared. Tuan found that this is a very potential market and decided to open the F88 chain at the end of 2013.
"I wish to change the view of Vietnamese consumers about pawn services. F88 offers friendly and dignified pawn services which are shown through spacious stores, dedicated and professional staffs, transparency, etc.,” said Tuan.
Indeed, the F88 chain has proven to be effective when Mekong Capital's Mekong Enterprise Fund III (MEF III) has invested in this pawnbroker chain. Although the investment value has not been disclosed, the MEF III normally makes investments from $6 to $15 million.
After long research on pawn model overseas, Tuan found that the pawn modal is the hybrid between a financial company and a retailer.
In terms of business, F88 is like a financial company which performs valuation, approval, management of loans ... Meanwhile in terms of operations, F88 is like the retailer as its customers are instant.
Tuan stressed that mortgage asset valuation is the most important step because if a mortgage asset is highly valued, customers are more likely to leave it. In the long term, F88 will not have loyal customers. However, if it is undervalued, customers will find other pawnbrokers.
Therefore, F88 only lends up to 80 per cent of the value of the mortgage asset. To achieve this, F88 pawnbroker chain has established a valuation team which is specialized in many fields such as cars, motorcycles, phones, laptops ... and always updates market prices.
The mortgage assets will be coded for valuation in accordance with criteria such as appearance, performance ...
As the pawnbroker chain accelerates
Besides building the modern technology system, F88 is said to be expanding its business. F88 through operating 42 stores in Hanoi and other neighboring provinces.
F88 targets at laborers and small retailers who fail strict requirements of banks as well as financial companies. Meanwhile, these customers are in urgent need of small and short-term loans, Tuan added.
It is thought that the interest rate of pawn service is high. But in fact, the interest rates F88 offers are similar to those of financial companies. At F88, for a $10-million ($437) mortgage loan with a term of less than one month, the borrower will be charged an additional fee of 3.6 - 4.5 per cent a month including interest rate, premium, loan valuation...
To increase revenue, F88 will be forced to raise the numbers of its customers by opening more stores in the future.
"Our strategy is responsible lending, which attracts customers and turns them into return customers, "Tuan shared.
Expectedly, F88 will land into Ho Chi Minh City in the third quarter of this year, which marks the development of this pawnbroker chain in Vietnam.
"Ho Chi Minh City is a potential market for financial lending where F88’s business scale can grow to three times bigger than in Hanoi," Tuan commented.