Author(s): KIM, W. Chan, MAUBORGNE, Renée, JI, Mi
The case “Fintech: Innovation without Disruption – How Prodigy Finance Achieved both High Growth and Social Good” describes how three INSEAD alumni founded a fintech company called Prodigy Finance and created a new market of international student loans by solving a long unaddressed problem in the finance industry. Lack of access to financing was a major barrier impeding international students’ pursuit of advanced education outside their home countries, especially for those aspiring to study in “high-earning advanced degree programs” at top universities where tuition fees were steep and few scholarships were available. Traditional banks were oblivious to the burning need of the international student population as their practice focused on domestic borrowers and their local past credit records. The founders of Prodigy Finance challenged the assumptions of the finance industry by creating a lending platform based on a forward-looking and cross-border risk assessment model, thereby effectively connecting international student borrowers with individual and institutional investors. Prodigy Finance has so far helped over 11,200 students from 132 countries, who have borrowed more than US$538 million.
The strategic move of Prodigy Finance constitutes an illustrative example of new market creation through nondisruptive creation, a concept coined by Chan Kim and Renée Mauborgne, authors of international bestsellers Blue Ocean Strategy and Blue Ocean Shift. By identifying and solving a burning problem that had never been addressed before, Prodigy Finance created a new market beyond existing industry boundaries, unlocking and capturing a burgeoning new demand without challenging or displacing the existing businesses of the finance industry.