Fintech South 2024: Luis Andino with Ditch

Intro: Broadcasting live from the Business RadioX studio in Atlanta, Georgia. It’s time for Atlanta Business Radio, brought to you by Kennesaw State University’s Executive MBA program, the accelerated degree program for working professionals looking to advance their career and enhance their leadership skills. And now, here’s your host.

Lee Kantor: Lee Kantor here, broadcasting live from Fintech South 2024 at the Woodruff Arts Center. So excited to be talking to my next guest, Luis Andino with Ditch. Welcome.

Luis Andino: Thank you so much for having me.

Lee Kantor: So before we get too far into things, tell us about Ditch.

Luis Andino: Of course. Well, Ditch is a personal finance app that uses AI to help people manage and repay their debt in a more efficient way.

Lee Kantor: So how does it work?

Luis Andino: It’s simple. So we take roundups of your purchases and then we send those automatically towards your debt. So think of walking into a coffee shop and buying a coffee for $3.40. We take that 60 cent roundup and then send it automatically towards your student loans, mortgages, credit cards, which means that you’ll get to pay off your debt faster. And the faster you pay off your debt, the less you’ll spend on interest. And that’s how we help our users save money.

Lee Kantor: So how much does that for an average person come up to every month? Because $0.60 at a time, it seems like, you know, my mortgage. It’s going to take a minute. Of course.

Luis Andino: Well, we’ve gotten clever about how we go about it. And one of the things that we do is that we allow users to add multipliers to their roundups. So we have the average multiplier on the platform is 2.7, which means that that 50 cent roundup is going to end up being over a dollar. And those add up to be about $150 on average for our existing users. But you could also take Instead of just a roundup, you could also decide to use a percentage of that transaction and then limit the transaction range. So if I go and, you know, spend $150 and I’m allocating 10% of all my transaction spend towards my mortgage or my debt, then that $150 transaction would end up resulting in a in a $15 payoff. And those rack up much, much, much faster. But our average user today is able to send about $150 towards their debt every single month.

Lee Kantor: And then how much time does that save them in and how quickly they can pay off their debt?

Luis Andino: It depends on the it depends on the type of loan. So mortgages, it’s going to be much more time for credit cards. It’s going to be a little less time. It depends on the balance of the credit card. But generally users expect to save around 30 or 40% of the total time it takes them to pay off their debt with these payoffs now.

Lee Kantor: So how does the app work for me as an individual. Do I pay for the app? And then you’re doing this, or I’m paying a transaction fee every time. You know, we do this dosey doe with the roundup.

Luis Andino: That’s exactly it. So we take a small percentage of every time that we make a payment towards your debt. And the reason that it’s still very profitable for you as a consumer is because you’re saving much more on interest. And in fact, you’re saving five in cases, five times more on interest than what we’re charging you to make that transaction. So the product is free to use. There are some premium features, but the product in itself and what I’ve described as free to use, and then we take a small percentage of those transactions. And that’s how we make money.

Lee Kantor: Now, how cumbersome is it to make the connection between the app and all of the things that debt like to get permission them in, like, because this sounds like a fintech challenge.

Luis Andino: It is. And, you know, that’s one of the things that we have solved. Um, and our average user, it takes our average user about four minutes to link all their accounts and set everything up from the moment that they open the app for the first time, to the moment that the payoffs start accruing, it takes on average about four minutes.

Lee Kantor: So it’s a matter of the permissioning my the place I owe the money to to say, hey, I’m going to make extra payments at random times. Or is that or do you do it all at one time, once a month? Like how do the is it happening in real time as I’m making the payment, it’s going in sending a dollar to my credit card.

Luis Andino: It’s not because of course transaction fees would make that impossible. If I’m sending $0.30 at a time and I’m paying a couple cents per transaction. So what we do is we aggregate and we allow the user to choose the pace, but it defaults to $25 right now. So every $25 we’re going to be making a payment from your checking account directly to your debt. Be that a student loan, your credit card, your mortgage, etc..

Lee Kantor: So you’re putting it in an envelope.

Luis Andino: Effectively. You can think about it that way. Yes.

Lee Kantor: So, um, what was the genesis of the idea? How did the kind of the concept come about?

Luis Andino: Well, first of all, I have a background in consumer lending. So I worked in consumer lending, and I just worked with enough people that were managing debt to realize that, frankly, that kind of sucks. And most people have it right. And so unless.

Lee Kantor: You’re the what is it, the rich, rich dad, poor dad. I think he likes debt.

Luis Andino: Exactly. Well, debt can be used very properly. And that’s one of the things that we want to also do is within the app, we also have some financial education courses that the user can take. And the idea is that eventually we’ll take user’s debt from being a burden to being a tool that they can leverage to live a more prosperous life. But doing that takes a lot, right? And so we’ve decided that we wanted to focus on the specific segment of debt, because most personal finance apps have overlooked that segment. They’re focusing on the folks that are high net worth individuals that have assets that they can generate revenue. They have a high Fico score so they can be sold a new credit card, whereas Dick works with the people that anecdotally have been overlooked, which is the people that manage and repay debt and that are struggling with debt.

Lee Kantor: So is there a story behind the name?

Luis Andino: Well, it’s it’s very simple and it’s kind of cheesy too. But what we what we do is we want to help our users Ditch their debt. And so for that reason, we’ve chosen that name. Um, and it’s it’s worked. It’s stuck. Our users like it. It’s catchy, it’s short, and it’s made sense thus far.

Lee Kantor: So at what stage are you as a startup?

Luis Andino: I would say that we’re in the seed stage. We’re still finding, uh, our groove and finding our what they call in the startup world product market fit. Uh, but we believe that we’re well on our way to do so. We’ve have we’re serving thousands of users that are using our platform every day. Uh, and we’ve been growing dramatically over the past four months.

Lee Kantor: So what was it like when you just put it out to the world and were like, oh, I hope somebody kind of bites on this thing.

Luis Andino: It was extremely. Yeah, it was extremely underwhelming. You know, you you spend months and months building a product and you have this expectation that as soon as you turn things on, people are just going to show up. In fact, we’ve we were scared initially of whether system could handle the load that we were expecting. And then you turn the thing on and then all of a sudden it’s your aunt, your mom, your cousin, your girlfriend, and a few buddies of yours that have downloaded your app. Okay, we.

Lee Kantor: Got the low hanging fruit out of the way. Now what?

Luis Andino: Now what? That’s exactly the question. And the. Now what is that? Then you have to build, which I think is one of the biggest challenges with startups, is you have to build mechanisms to get the attention of a lot of people, whether that’s through the product messaging and making sure that that’s simple enough for someone to understand, whether that’s advertising on social media, whether that’s building partnerships with companies that already have your target audience. And that’s really one of the hardest parts about building a company, is finding enough people to care about what you’re building, and making sure that you continue innovating on the product to make sure that people still continue to care.

Lee Kantor: So who are the right kind of partners for you?

Luis Andino: We partner with fintechs, consumer lenders, banks, community banks, credit unions, all the folks that are actively, uh, having customers that owe them money. And the use case is that we partner with these types of institutions to help them service those delinquent loans. So if you’re a consumer lender, a bank, a credit union, and you have $100 million in outstanding debt and a portion of that is past due or people are missing payments, the use case there would be that you would send them an email and say, hey, we are making this tool available for you. And then that user would get the tool for free. And then the payoffs that we generate are those round ups will automatically go towards servicing that lender’s debt. And in that equation everyone wins. We gain a customer, the bank gets their money back and the lender and the customer gets a tool that helps them manage their debt in a more efficient way to make that process more seamless.

Lee Kantor: And are you white labeling it for them or is it still under the Ditch name?

Luis Andino: Well, for now, we’re trying to preserve our brand because we believe that the engagement is going to be higher. So if your lender is reaching out to you and saying, hey, we have this tool that we want you to use, you’re going to be like, man, I owe you money. I’m not going to pick up that phone call. I’m not going to open that email. But if it’s coming from a third party and it’s a tool that’s built specifically to help you agnostic of the lender, then we are confident that the engagement is going to be much higher coming from us than it would be if it was a white label solution that we’re making available to the lender. But that’s not out of the question for our future. I think that initially we’ve seen enough traction Attraction to want to bring our brand to life as opposed to just the technology.

Lee Kantor: Now, what was it like going through the innovation challenge?

Luis Andino: It was great. The preparation was very formative. It was the first time that I’ve been in front of an audience of that size, which initially was nerve wracking, but I was pleasantly surprised to feel that comfortable in front of that many people. And it just is another example of pushing the boundary further and further beyond of what we’re capable of as entrepreneurs.

Lee Kantor: So would you learn any new kind of thoughts or anything that somebody brought up that you hadn’t thought of yet, or any connections maybe, that are going to help you get to a new level for sure.

Luis Andino: Connections, definitely. I mean, we’ve had tons of people reach out to us. We had hundreds of people download the app right on the spot because we put up a QR code. But I guess like the the undertone of this is, is to just, uh, be prepared. And it’s not as intimidating as you’d expect, even if you’re in front of hundreds of people or thousands of people, if you know what you’re building and you deeply, deeply care about what you’re doing, the the passion is going to come through, and that’s going to be what resonates with your audience. And it’s not only enjoyable, but very productive at the end of the day, for an entrepreneur to build the habit of speaking to large amounts of people and feeling super comfortable doing it.

Lee Kantor: So what do you need more of? How can we help?

Luis Andino: Well, we’re always looking to build partnerships with, like I said, consumer lenders, credit unions, banks. We also have a partnership channel with large employers. So we partner with companies to allow to offer Ditch as a financial wellness benefit for their workforce. So in the same way that companies pay for health insurance for their employees, physical wellness or gym memberships, we also believe that there’s a huge impact that debt and money make on an employee’s productivity, their retention, their mood. And we believe that serving up these financial wellness tools for as a as a perk for the employee is super productive as well. So we also partner with large employers and POS.

Lee Kantor: So if somebody wanted to learn more, have more substantive conversation with your team, get the app. Is there a website?

Luis Andino: Of course. Our website is.io/contact. That’s the best way to get Ahold of us again. That’s ditc h.io/contact.

Lee Kantor: Well, Luis, thank you so much for sharing your story. You’re doing important work and we appreciate you.

Luis Andino: Thank you so much.

Lee Kantor: All right. This is Lee Kantor. We’ll see you in a few. At Fintech South 2024.