• Subscribe
  • Contact Us
  • About LendIt Fintech News
  • Home
  • Menu Item
  • Menu Item
  • Menu Item
  • Menu Item

Lend Academy

LendIt Fintech News: Daily Coverage of Fintech & Online Lending


  • Editorial
  • Daily News
  • Podcast
  • Investor Forum
  • Events

Smartphone Data is the Key to Expanding Access to Credit

Every smartphone owner produces a huge amount of data and companies are now using some of this data to underwrite loans.

July 13, 2017 By Peter Renton 1 Comment

Views: 177

The average American checks their phone 47 times a day according to this study by Deloitte. The number is much higher (82) if you are in the 18-24 year old age bracket. We keep our lives on our phones and so it has become the most essential piece of technology we own.

With all that usage comes a treasure trove of data. Now, this also brings with it a host of privacy issues but that is not the focus for this article. What I am talking about here is smartphone data and how companies can leverage this to expand access to credit. This particularly applies to the underbanked consumers in this country and more importantly in developing countries.

For many consumers their access to credit is limited because they have little or no credit footprint. They may operate primarily with cash, have no credit score and are therefore unable to qualify for a loan from most lenders. Their credit needs are often more urgent than the mid-prime and prime consumer but because lenders have little or no data they have difficulty in obtaining credit.

This problem is particularly acute in the developing world. Here, most people are outside the traditional financial system, if there even is one, and do not have access to credit. But that is changing as companies like Kiva, Lenddo (listen to Episode 91 of the Lend Academy Podcast), Branch and Juvo (see this session at LendIt USA 2017) are helping consumers get access to credit, often for the first time.

What lenders are finding out is that even when there is no credit data available the data that is inside a consumer’s smartphone can be very predictive of creditworthiness. I think Lenddo (they are a technology provider, not a lender) is doing some of the best work in the space as they have a great deal of experience in many different countries using data contained in smartphones to score consumers. In this country LendUp and Elevate are also doing good work and I like Oakam in the UK.

Underwriting is All About Data

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: artificial intelligence, big data, credit models, developing countries, smartphone, underwriting

Views: 177

Factors to Consider When Investing in Small Business Loans

May 22, 2014 By Peter Renton 14 Comments

Views: 1,227

Small Business loan application

This is a guest post from Rob Snow, the Co-Founder and Managing Member at Carillon Capital, an investment banking and advisory firm specializing in financial services primarily specialty finance, asset management, and technology, including major initiatives in crowdfunding. Over the past 19 years, Rob has purchased and sold over $10 billion in whole loans and led the issuance of more than $4 billion in asset-backed securities. In this post he compares consumer loans with small business loans and what investors need to consider when lending to small businesses.

As the world of individual investors buying consumer loans has grown and started to mature the acquisition of small business loans is still in its relative infancy. As a banker who has spent most of my career originating and managing both consumer and small business loans, I think it is important to point out some of the unique risk differences in these two asset classes.

In the small business lending market the type of credit can have impact on the expected loss rate. I will not discuss all of the types of loans available in the market: working capital, equipment finance, merchant cash advance receivable lines; I will, however, focus on the two most common loan types in the market: working capital loans and equipment finance.

Working Capital Loans

Working capital loans are those that are most closely associated with the current consumer unsecured loan market. These loans are based on a business’s identified need for capital but may not have a specific collateral to file a lien against. For example, a small business owner may want some money to spruce up their existing location or need the money for marketing programs. In the business lending world, the purpose matters.

Healthy businesses are those that are looking for capital to grow. Those that need the funds to covers existing expenses represent much higher risk. One notable exception to this can be seasonable business with a long track record of performance.

Equipment Finance Loans

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: credit models, small business loans, underwriting

Views: 1,227

Investor Intelligence

Peter Renton's Returns

Investor Forum

Lending Club Review

Prosper Review

Investor Resources

Most Popular Editorials

The Pure Marketplace Lending Model is Dead, the Hybrid Takes its Place

The 2018 Lending Club and Prosper Tax Guide

My Returns at Lending Club and Prosper

Map of Available States for Lending Club and Prosper Investors

Banks and Marketplace Lending Platforms: Ideal Partners?

Subscribe to the Podcast

Subscribe to the Lend Academy Podcast on iTunes
Subscribe to the Lend Academy Podcast
List of Podcast Episodes

Archives

Follow @LendAcademy Follow @LendIt

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

Recent Editorials

  • LendingClub Launches Founders Savings Accounts
  • Top 10 Fintech News Stories for the Week Ending February 20, 2021
  • Podcast 286: Billy Libby of Upper90
  • Deep Dive into the MoneyLion and OppFi SPACs
  • Top 10 Fintech News Stories for the Week Ending February 13, 2021

Copyright © 2021 · Metro Pro Theme on Genesis Framework · WordPress · Log in