One old entrepreneur story has it that someone who knows nothing about an industry launches a venture, buys a fictitious-business name filing published in a favorite local business journal, and with some unsexy stuff in-between, is eventually visited by success, snagging a slew of small-business honors, buying a Revero, then doing it all over again.
Alex Chen is doing it all wrong.
First off, he knows a lot about the sector of his Irvine venture, at this point a niche mortgage lender called Tiger Loans Inc. He spent nearly a decade with Experian Consumer Direct Inc. when it was in Irvine, a unit of credit tracker Experian Plc that brought us those catchy FreeCreditReport.com jingles.
He’s acquainted with borrowers, lenders, and the need for not just big data, but the good kind.
Second, Chen’s skipping the part about magical success and putting crazy chunks of time on the unsexy stuff. He’s busy laying the groundwork to build the lender into “an online B2C platform … based on personal-financing big data” to sell consumers “all financial products and services they’ll need through their life.”
Modest goals have never been an entrepreneur’s strong suit.
China Calling
The work comes first.
Tiger Loans is focused on two targets for the moment: Asian-American professionals who live and work in the U.S., and foreign nationals abroad—especially in China—both of whom seek U.S. investments, such as real estate.
Chen was born in China, came to the U.S. in 1994 for graduate school, and is now a U.S. citizen—he belongs squarely in the first group.
The second has gotten interesting recently as China tightened the flow of cash out of the country. People who previously could plunk down $2 million to buy a home in the U.S.—a second residence for travel or business, or for their children attending U.S. schools—now can’t do so as easily.
“These are high-income people,” Chen says. “The loans are often not backed by Fannie or Freddie” because of the loan amounts involved and because such borrowers, he says, often don’t have U.S. credit histories or income.
The former all-cash buyers now need to borrow, which means they need lenders, perhaps including Chen.
On the plus side, they might now buy two houses with that $2 million—a funding Tiger Loans can help arrange.
The Facts
It’s a fact Chen shares with potential customers.
Interest rates are still low, he says—and there are those U.S. schools—and not just the University of California-Irvine. “Irvine public schools have name recognition in China.”
Chen left Experian in 2010 to launch broker Circle Square Mortgage. The business grew into direct lending, and he renamed it Tiger Loans in 2014. It did about $100 million in loan volume last year.
He’s licensed to loan in California, Washington, Texas, Florida, Georgia, Virginia and Maryland—the states are either on the Pacific Coast, sunny most of the year, international favorites, near halls of power, or all of the above.
He began to see extended possibilities when he had to buy life and health insurance for himself. In underwriting, mortgage bankers see a lot of the information that guides consumer choices or corporate decisions in other products, for instance, insurance, and the insurance shopping helped him make the connection.
“We have income data, asset data, the credit report,” he says. “We know why they don’t qualify or why they do, and if they’re not looking for other products now,” and when they might be doing so.
He was licensed to sell life and health insurance in California in 2016 and founded Tiger Life Insurance Agency Inc. last year.
“Once I have that [data], why should I only do mortgages?”
Light Bulb Moment
One reason not to is that Consumer Financial Protection Bureau numbers show the national new-home loan average is $244,000, and a broker might get 2% of that—about $4,900.
Many people buy homes more often than every 30 years nowadays, but not enough, so selling other products in-between looks like a good idea.
“Once they do a mortgage, who knows?” Chen says.
His idea is financial planning and products for all.
“Average Americans haven’t fully utilized financial products” commonly available to “high net-worth individuals” like those China-based homebuyers.
“The assets of 99% of my [lending] customers’ households [and] my own weren’t optimized or protected,” he says. “What I really want to do is build something for [them].”
Most boutique financial services companies cater to the wealthy, he says. If he can scale such efforts with technology—apps and an online portal—those can also be offered to those in other income brackets.
The lending will “build momentum and infrastructure,” Chen says. “My end-goal is to make the online platform a go-to place for all financial products for every American family.”
Menu of Services
See what we mean about entrepreneurs’ extravagant goals? And that’s not all.
Consumers could research and compare financial products and services at different stages of life: mortgages, auto loans, personal loans, investments and insurance.
“The entry point could be any of the items,” he says, and data would be shared across all.
The platform will “apply sophisticated [artificial intelligence] algorithms to personal financial big data” to help loan officers and agents of all stripes—insurance, investing, etc.—find “suitable solutions [and make] recommendations” to consumers, “but not replace the live person needed to answer deeper questions … build trust, and eventually close the sale.”
That will include “pulling consumers’ personal financial data, analyzing it, and presenting recommendations.”
Licensed reps “can cross-sell and present financial recommendations to targeted customers in a more efficient manner with the help of personal financial big-data analysis.”
Sweat
The platform then executes transactions—and as owner of the platform, Chen gets a commission, the rate varying depending on the product. He says the rate will beat the “much smaller finder’s fee” typical in mere lead generation.
“I don’t just want the lead. I want the transaction.”
New mortgages alone top $2 trillion a year, according to the Urban Institute Housing Finance Policy Center.
But, “The value of each customer on the platform will be based on all financial products through life … not just one transaction.”
Of course, Chen’s not the first to think of all this, and that’s where the work continues.
“To build such a platform is no easy task,” he says. It “requires a lot of … sweat and … ample funding.”
He said he self-funded two apps under the name Approv—one for consumers and a professional version for working loan agents. The apps have started on the work described above—including a patent-pending direct-chat feature.
They weren’t cheap.
Chen’s approv.com website, launched in 2013, is the mobile app-suite basis of the future platform.
