UK based FinTech solutions provider, FriendlyScore, has announced the launch of its SAAS application that analyzes real time social media data to assist lenders in creating risk profiles for potential borrowers with little to no credit history.
The company, who was a 2014 participant of London’s selective FinTech accelerator Startupbootcamp, looks to solve a widespread problem between traditionally risk-averse lenders and first-time borrowers that typically face loan rejections due to a lack of historical data points that would be used to assess their creditworthiness (an assessment of the likelihood that a borrower will default on a loan). With FriendlyScore, lenders can use aggregated social media data (provided by consumers) to fill in those data gaps and ultimately help serve a new population of eligible customers.
Friendly Score CEO, Maciej Dolinksi, says, “Young borrowers want access to loans and lenders want to make sure they are protected from fraud and high-risk loans. FriendlyScore fills this gap by creating a scorecard based for credit worthiness using over 800 hard data points and social textmining (NLP). An accurate credit score can now be generated simply with a Facebook profile.”
Using Technology and Social Media to Enhance Traditional Lending
FriendlyScore has already scored over 6,000 consumers and works with lending partners by integrating an open API to pull predictive data based on repayment feedback and combines that with real-time text extracted social media analysis to generate a credit score. For consumers, privacy and convenience are emphasized and all data collected is dependent on user permission and localized to ensure privacy.
The FriendlyScore team explains, “We have observed some incredible capabilities of online & social data. Everything ranging from data points that reflect the quality of someone’s social and professional network, online interactions, behavioral and communication habits, to verified data about basic education, employment, and residential history. For example, there are strong correlations between hours of activity online and creditworthiness, as is there between level and quality of interactions with friends and creditworthiness. These data points have opened a new world of possibilities.”
Goal of Facilitating Greater Financial Inclusion Worldwide
FriendlyScore is looking to be a frontrunner in a global market where innovative financial technologies are helping lenders grant a new wave of mobile, young, and first time borrowers with access to financial services that are typically difficult to obtain:
- In Europe alone, over 9 million millennial customers are currently searching for a loan online on a monthly basis and 87% of millennials face a loan rejection when applying for a loan
- In most developing countries, less than 10% of people aged 15 or older have borrowed from a financial institution while the global social media penetration rate has reached 30%
Gideon Valkin, COO of FriendlyScore says, “When I first moved to London, it took me months to receive a credit card or cell phone contract due to a lack of credit history there. Even with a prestigious university degree, a job at a top bank and a clean credit slate in two other countries, it was extremely difficult and time consuming. The world needs a way to verify creditworthy individuals without having localized credit history. Particularly, in countries where vast portions of the population would otherwise never have access to financial services. Modern microfinance, exemplified by the Grameen Bank of Bangladesh, has taught us that affordability and financial access are not prerequisites of creditworthiness.”
In April 2015, FriendlyScore closed a $375K seed round from UK-based Mercia Fund Management, adding to the $15K prize money granted by the Startupbootcamp accelerator program. With eyes on a late 2015 Series-A round, the company looks to continue its expansion by focusing on new partnerships with peer-to-peer lenders, crowdfunding platforms, and mobile focused banks, after which it will focus on traditional banks and lenders worldwide.
FriendlyScore is currently live with a European point-of-sale ecommerce credit provider, two European p2p lenders and a South African p2p lender, and is piloting with many other alternative platforms and digital banking services in the UK, Europe, Brazil, Southern Africa and India.