Initially started as a micro-finance startup with the goal of developing algorithms that can determine creditworthiness of borrowers with no bank information, Filipino company Lenddo will now ditch its lending arm in place of selling its algorithmic services to companies inside and outside of the banking sector, according to Tech in Asia.
Initially, the goal of Lenddo was to loan funds to those with no banking information by using social media contacts and interactions to determine creditworthiness around an algorithm. The idea of this was that by determining who people hang around with, what their job is and what their interests are, there was a way of determining how good people were on their debts.
"As we processed thousands of loans, our algorithm got better,” Lenddo business development director Anthony Noel told the publication on Jan 26. He went on to say that because of the constant refinements, the bad loan ratio for Lenddo was better than the microfinance industry average.
Now, with algorithm in place, Lenddo is looking to move out of the loan business and into selling their services to whichever company wants to hire them. Aside from banks, Noel lists such possible clients as job recruiting firms, e-commerce websites, and even online dating websites, where determining trust through social media could be considered crucial. Lenddo has already started the transition by selling off its loan division to BanKO, whose parent company, Ayala group, was an initial investor in Lenddo. Already, Lenddo has Globe Telecom, also an Ayala company, as a client.
The structure of Lenddo is similar to British startup HelloSoda, which uses similar algorithms to glean creditworthiness from social media outlets and online interactions, though this company started as a service provider, whereas Lenddo got its feet wet with the lending industry first before its recent move into selling the service itself.