UK based FinTech solutions provider, FriendlyScore, has announced the launch of its SAAS application that analyses 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 participant in London's selective FinTech accelerator Startupbootcamp in 2014, aims 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 asses their creditworthiness, (i.e. an assessment of the likelihood that a borrower will default on a loan).
With FriendlyScore. lenders can use aggregated social media data provided by customers to fill in those data gaps and ultimately help serve a new population of eligible customers.
Friendly Score CEO Maciej Dolinski said:
"Young borrowers want access to loans and lenders want to make sure that they are protected from fraud and high-risk loans. FriendlyScore fills this gap by creating a scorecard based on 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 6000 consumers and works with lending partners by integrating an open API to pull predictive data based on repayment feedback. It then combines that with real-time text extracted from social media, which is then analysed to generate a credit score.
For consumers, it should be noted that privacy and convenience are very important aspects to the services provided by the company, and all data collected is dependent on user permission, and localised to ensure privacy.
The FriendlyScore team explains:
"We have observed some of the incredible capabilities of online and social data, ranging from: data points that reflect the quality of someone's social and professional network, online interactions, behavioural 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 credit worthiness, just as there is a strong correlation between the 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 front-runner in a global market where innovative financial technologies are helping lenders to grant a new generation of mobile, young and first-time borrowers with access to financial services that are typically difficult to obtain.
In Europe alone, over nine 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 over have borrowed from a financial institution, whilst the global social media penetration rate has reached 30%.
% of people aged 15+ who have borrowed from a financial institutions (World Bank)
Gideon Valkin, COO of FriendlyScore, says:
"When I first moved to London, it took me months to receive a credit card or mobile phone contract due to a lack of credit history in the UK. Even with a prestigious university degree, a job at a top bank and a clean credit slate in two other countries, finding a suitable loan provider was difficult and time consuming.
"The world needs a way to verify creditworthy individuals without having to rely on localised credit history. This particularly applies to 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 £150,000 seed round from UK-based Mercia Fund Management, adding to the £9500 prize money granted by the Startupbootcamp accelerator programme. 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. It is also piloting many other alternative platforms and digital banking services in the UK, Europe, Brazil, South Africa and India.