Payday lenders exist because people fall outside of the banking system.
While the industry in Britain has been mired in controversy, Zaim’s founder and chief executive Siro Cicconi says things are more regulated in Russia.
The central bank has set the maximum interest rate at 1% a day with a limit of 250 days.
That cap is there to ensure a loan is not going something that grows forever and make the lender realise that at a certain level the client will not be able to repay.
Still, 1% a day is hefty. Cicconi says that its average ‘microloan’ is for £95 and runs for 40-45 days.
“The typical service is for the lowest segment of the population, which needs a bridge between a working period to another working period.”
This is an industry becoming more and more popular worldwide and not just in Russia because large segments of the worldwide population cannot afford the standard of service in the banking sector.
Zaim has to report to Moscow’s central bank every quarter he adds, with a deep audit carried out every two years.
It is the same for any bank or lender operating in Russia, he adds.
The collapse in the rouble in 2015-16 caused a shake-out of banks in the country and Cicconi admits it was a tough time for Zaim.
But having survived, it is now part of a much smaller, more professionally managed 'microfinance' sector.
Heavy spending on IT has been part of a programme by the company that has seen bad debts or defaults drop from 35% to under 10%.
All that investment has now been made, adds Cicconi, and the £2.6mln raised at the time of the London listing will fund the expansion of a loan book that currently stands at around £3.5mln per month.
Most loans still come from 96 walk-in stores in Moscow and other major cities in the west of Russia where applicants get a loan decision within seven minutes, but the future is going online and mobile.
Utilising the government’s e-portal and Zaim’s calculation algorithm, loans can also be sent to any payment system available in the country.
Set up in 2011, Zaim is profitable and with the listing behind it Cicconi has ambitions to double market share within 4- 5 years ‘without doing anything extraordinary’.
For example, Cicconi says the number of companies in the payday sector in Russia has halved to 1,900 recently so it does not need to acquire to grow.
Deals to leverage its IT platform are an option, he adds, and to give it a presence outside of its west Russian base.
Eventually, too, this might mean other countries if the same level of information as Russia provides is available for its credit scoring algorithm.
“ it is fintech - a purely technological approach to financial services.”
At 3.5p, Zaim is valued at £15.1mln.