Lenddo

Lenddo is a Singapore-based software-as-a-service company which uses non-traditional data comprising social media and smartphone records in order to ascertain customers' financial stability. Its vision is "to improve financial inclusion for at least a billion people" in developing countries around the world.[1][2] In October 2013, Lenddo had over 350,000 members globally.[3]

History

Founded in 2011 by co-founders Jeffrey Stewart and Richard Eldridge, Lenddo initially operated an online lending operation in three countries: The Philippines (since 2011), Colombia (since 2012) and Mexico(since 2013).[4][5][6] The company started when Stewart and Elridge were running technology companies in the Philippines and several other emerging markets. "Their skilled young staff often asked for loans...With repayment rates in microfinance as high as 98 percent in multiple regions, the opportunity seemed obvious." By January 2011 the company was launched, and by March they had issued their first loan.[7]

Lenddo closed a Series A round of funding in venture capital in May 2012 from investors including Accel Partners, Blumberg Capital, Inovia Capital and Omidyar Network.[8] In 2013, Lenddo received an additional $6 million funding from investors including Kickstart Ventures, Golden Gate Ventures and the co-founder of Skype, Toivo Annus, to fund its planned expansion across Southeast Asia.[3][9]

In January 2015, Lenddo announced expanding its credit scoring and identity verification solutions to third parties globally.[10] By October 2015, the company raised capital in series B1 [11] and by January 2016, confirmed its international exposure by opening offices in India.[12] Lenddo now have extended presence across Latin America, South Asia and South East Asia and onboard more than 200,000 applicants every month[13] Lenddo helps financial service providers extend credit to consumers and SMEs in this segment by analyzing these digital footprints to verify their identities and assess risk. Their algorithms translate nontraditional data, like social media activity, browsing behavior, geolocation and other smartphone data [14] into insights around the consumer’s behavior, network, and strength of their relationships—information that can be highly predictive of people’s willingness and ability to repay a loan.[15]

Lenddo partners with traditional and alternative lenders, who offer borrowers the opportunity to share their individual data in order to be assessed. Once consumers opt in, Lenddo’s machine learning algorithms analyze up to 12,000 variables for each application to generate a credit score. The results are incorporated into the lender’s existing credit-assessment platform, through easy to integrate APIs. Lenddo’s data scientists also work with lenders to build custom scorecards, in order to realize the full potential of the data. Through its platform, Lenddo attempts to offer both financial service providers insights into emerging market Big Data analysis, while providing emerging middle-class consumers access to their financial tools.[16]

Strategy

Lenddo's target credit customers are primarily subject to emerging economies, in which financial records are limited, while social data is prevalent. According to Golden Gate Ventures partner Vinnie Lauria, there are nearly 610 million individuals in Southeast Asia to whom banks are hesitant to lend.[17] Lenddo bypasses the need for a historical credit score through its own scoring system, based on social data.[5] In order to apply, one must first accumulate a minimum score (called "LenddoScore") of 300. The user is scored based on 3 main factors—their social network activity (using data from Facebook, LinkedIn, Twitter, Gmail, and Yahoo accounts),[18] a user's "Trusted Connections" (character references that will vouch for the borrower), and financial performance, if the person is a repeat borrower.[3]

Mother Jones published an article in September 2013 which discusses a concern that credit companies who use social media like Lenddo, LendUp, Moven, Neo, Kabbage, and Kreditech may "be discriminating against applicants who essentially appear socially undesirable." David Jacobs, of the Electronic Privacy Information Center, states that there is a "general risk caused by using personal information to clarify and sort people and determine who is a high-value consumer and who is not worth engaging with." Furthermore, he is worried about the possibility of "digital redlining," referring to the practice of banks refusing to issue loans in poor or minority neighborhoods, despite the fact that the eligibility of a person to get a loan is decided by algorithms.[19] In response, Jeff Stewart defended the use of social media to assess borrowers by stating that the ability to provide financial assistance to people who would otherwise not be served outweighs the possibility of inaccuracy in credit-making decisions.[19]

Awards

Lenddo was a winner of a FinTech Startup Award in 2011 and recognized as one of the top 15 global most innovative financial services companies in 2012 at Sibos.[20][21] The World Economic Forum recently recognized Lenddo as one of its Technology Pioneers for 2014.[22]

Lenddo was awarded with the Mondato Asian MFC Innovation of the Year Award in October 2015 that acknowledges the MFC provider whose product or service exhibited the most innovation in their given market in Emerging Asia during 2015-2016.[23]

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References
  1. "Lenddo's Social Credit Score: How Who You Know Might Affect Your Next Loan".
  2. "Lenders are turning to social media to assess borrowers". The Economist. February 9, 2013.
  3. "Lenddo gets $6 million funding, plans to expand in Southeast Asia".
  4. "About Lenddo". Archived from the original on 2013-01-17. Retrieved 2013-03-03.
  5. "Lenddo uses social networks to give loans and improve credit".
  6. "Lenddo arrives in Mexico!". Archived from the original on 2013-08-31. Retrieved 2013-09-03.
  7. Groenfeldt, Tom. "Lenddo Creates Credit Scores Using Social Media". Forbes. Retrieved 2020-06-24.
  8. "Lenddo Raises $8M To Use Online Reputation For Lending In Emerging Markets". techcrunch.com. May 15, 2012.
  9. "Lenddo The Google of Lending". Lending Times. February 29, 2016.
  10. "Lenddo Expands Credit Risk and Verification Technology Globally". globenewswire.com. January 21, 2015.
  11. "Asia-based fintech startup Lenddo raises series B funding". October 14, 2015.
  12. "Lenddo Appoints CIBIL s Abhinav Haldia as Country-Director for India". February 10, 2016.
  13. "Lenddo to help Indian lenders assess small value customers better". Mint. August 9, 2016.
  14. "Why Fintech Is Different In Asia". Forbes. April 29, 2016.
  15. "How non-traditional credit scoring can help you overcome denial of loan". The Financial Express. July 23, 2016.
  16. "Big Data and Online Scoring: Fintech and Beyond". FintechRanking.com. March 17, 2016.
  17. "Lenddo gets $6 million funding, plans to expand in Southeast Asia".
  18. Hardeman, Bethy (June 14, 2012). "Lenddo's Social Credit Score: How Who You Know Might Affect Your Next Loan". Huffington Post.
  19. "Your Deadbeat Facebook Friends Could Cost You a Loan".
  20. "Sibos Issues, October 31, 2012" (PDF). Archived from the original (PDF) on October 4, 2013. Retrieved March 3, 2013.
  21. "Innotribe Announces Finalists for Startup Challenge at Sibos, Osaka". Archived from the original on 2015-02-03.
  22. "Technology Pioneers 2014".
  23. "Mondato Summit Asia 2015". Archived from the original on 2016-07-31. Retrieved 2016-08-09.
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