I received an email from a former CIBI Information colleague Anthony Noel who shared to me about this fast rising social network called Lenddo. I got curious and check it out and to be honest quite “intrigue about the concept’. So what is Lenddo? I was told that it is the world’s first online platform that empowers the emerging middle class to use their online social connections to build their creditworthiness and access local financial services. Founded in March 2011, the Lenddo community has tens of thousands of members, and member growth continues to double every 60-90 days.
Lenddo’s community members can use their reputation on social networks such as Facebook, Linkedin and Twitter to obtain life-improving loans. By combining community-based microfinance techniques with social media profile data, Lenddo is pioneering a new approach to financial inclusion. The willingness of the community to vouch for you, coupled with how you behave online, are two incredibly powerful predictors of one’s creditworthiness.
I was told that Lenddo give out loans for specific life-improving purposes only, such as educational or medical needs; career-related training or relocation; home repairs; small business set-up or expansion; and debt consolidation. Interest rates are generally between 0.99% and 2.49%* a month, depending on the “creditworthiness” of a borrower. Lenddo.com.ph is found online; one can fill out a registration form and loan application form from any place where they connect to the Internet. The company’s community managers assist members and coach loan applicants through the loan process. Loan approval and funding usually occurs within 1 business day, if the member completes all requirements.
To apply for a loan, members must establish a ‘trusted community’ of family, friends and co-workers at Lenddo.com using their social networks and email to connect people. When they need a loan, members apply online in the Lenddo.com.ph platform in a process that takes less than 10 minutes. A decision is made within 1 business day based on the strength of their community and the details in the loan application.
The strong sense of community, whether in a family or group of friends, is innate in the Philippines’ culture. There are concepts such as “bayanihan” or “utang na loob” that convey this. At the same time, the Philippines is experiencing an explosive increase of the emerging middle-class who are generating significant economic growth for the country. Research also concluded that these same emerging middle class were not being effectively served by the traditional financial institutions, with many employed middle-class consistently requesting salary loans and telling stories of 5/6 and payday loan schemes in which they were trapped.
Lastly, I was told that “on the rare occasion that loans cannot be paid on time, the borrower’s community is impacted. In most cases one’s trusted community has enforced repayment via social pressure, as their Lenddo score and ability to access live improving loans is impacted as well”.
Overall, I am really curious on how this concept will work effectively in the Philippine setting, especially from the point of collection management.
For comments, rejoinders and questions related to credit & collection, send email to elimtingco@yahoo.com.