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Applying for mortgages is often a time-consuming and disorganized process, with reams of manual paperwork required. Based in Jakarta, IDEAL simplifies the process with a platform that lets users compare mortgage products and apply for them from multiple banks at the same time. The startup announced today it has raised $3.8 million in pre-seed funding led by AC Venture and Alpha JWC, with participation from Living Lab Ventures and Ciputra Group.

The funding will be used of product development, hiring and expanding its products. IDEAL eventually plans to add other major lending products and expand into more Southeast Asian countries.

Started last year, IDEAL’s founding team includes Albert Surjaudaja, Ian Daniel Santoso and Indira Nur Shadrina, with Jeganathan Sethu joining this year. Before launching IDEAL, Surjaudaja was former head of operations strategy at digital payment service OVO.

IDEAL founders Albert Surjaudaja, Indira Nur Shadrina and Ian Daniel Santoso

Surjaudaja told TC that IDEAL was started “with the thinking that consumer lending in Indonesia is broken.”

“Used responsibly, credit is a vital part in fueling the growth of economies. It acts as a multiplier effect in generating value,” he added. “With that in mind, Indonesia has one of the lowest credit to GDP ratios in the region, signifying that there is a lot of economic value potential that can be unlocked. There are a number of reasons for this, but one key reason is the absence of good, accessible options when it comes to lending products.”

Surjaudaja said that traditional retail banks offer a relatively poor digital experience for their consumer lending products, making them less accessible. On the other end, there are P2P lending and BNPL startups, but their products are centered on smaller, more consumptive loans.

“We feel like there is a clear gap in the market, namely conventional, productive and larger ticket size consumer lending products offered on a user-friendly digital platform,” he said.

Surjaudaja says IDEAL chose mortgages as its first consumer lending product because of its market potential, citing 2021 research from Bank Indonesia that says the country’s mortgage industry is valued at $39 billion, with a projected 17% CAGR over the next five years. Gen Z and Gen Y is set to become the primary audience in the home ownership sector.

Indonesia’s mortgage penetration rate is also just 3% of the local GDP, one of the lowest in Southeast Asia.

Surjaudaja added that the traditional mortgage process is very manual, highly fragmented and takes a lot of time and effort from customers.

For example, most people lack information about how the mortgage process works, making it confusing. The document submission process is also manual and unstandardized with multiple parties involved and documents with sensitive information handled without security. Surjaudaja said consumers suffer from lack of transparency in rates and availability of different options, and an opaque application process that means they need to contact their agent numerous times.

IDEAL’s digital platform seeks to solve these challenges. While mortgages are currently primarily suggested by property agents, IDEAL lets buyers select their own mortgage products. It also has a feature, called IDEAL Checking, that lets people check their credit instantly.

It helps users choose a mortgage by calculating costs and installments, and also includes a direct application system that enables users to apply to multiple banks with one set of data and a real-time tracking system. IDEAL says its digital system is secure, and minimizes human error and data leaks that often occur during paper-based or messaging-app-based mortgage processes.

Other features include detailed information about property units from IDEAL’s developer partners, different mortgage products from banks and IDEAL Compass, a short questionnaire that helps the platform understand what a customer needs and produces a simulation of monthly payments, tenor and other information about a mortgage.

The startup is currently focused on the primary housing marketing, but plans to expand to secondary housing and mortgage refinancing/takeover products. It will also launch a dashboard that will help users monitor and manage their mortgages. IDEAL also plans to expand to other major lending products, with a long-term vision of entering more Southeast Asian markets like Thailand, the Philippines and Vietnam.

Surjaudaja said 60% to 70% of Indonesia’s mortgage market falls below the secondary housing category. “Our market research signals a strong need and demand from Indonesian consumers for a way to easily takeover/refinance their current mortgage, since the gap between fixed and floating mortgage interest rates in Indonesia can be quite sizable,” with up to a 10% difference.

IDEAL monetizes through commissions from banks and property developers for every successful loan application through the platform. It is currently partnered with five banks, including CIMB Niaga, OCBC NISP and Maybank, and several of Indonesia’s largest property developers, like Sinar Mas Land, Ciputra Group and Agung Sedayu Group. Its platform connects with banks through APIs to make the data-gathering process simple.

Some of IDEAL’s competitors include Pinhome, Cermati and Cekaja. Surjaudaja says Pinhome’s business model is more property-centric, providing an end-to-end solution related to property from home discovery to home financing. On the other hand, he describes IDEAL’s business model as “customer centric” and leaning more toward fintech instead of proptech. Cermati and Cekaja, meanwhile, are financial aggregators that allow users to browse mortgage products from multiple banks, but Surjaudaja said they are not fully digital, do no provide contextual data and still require an online-to-offline process, without a credit scoring pre-check and pre-filtering applicants to banks.

In a prepared statement, AC Ventures managing partner Adrian Li said, “Indonesia’s mortgage penetration is currently at 3% of the local GDP. That is low copared to Malaysia and Singapore, which are at 30% or higher. This presents a US$30 billion opportunity if Indonesia can double its mortgage penetration to 6% via improved financial access. IDEAL’s strong-suited team identified a bottleneck in the mortgage industry and brought domain expertise in fintech and real estate to build a one-stop shop for mortgages in Indonesia.”