Making Lending Social Again: Social Credit Scoring

by Juan Mazzini,  Luis Chipana, November 5, 2015
Case Studies
Global, Latin America

Abstract

This is the story of a firm that started as a lender and evolved into a tech company helping businesses and finance companies evaluate both the character and identity of customers using alternative data.

For decades credit has been based on credit history, but how do you lend to those without credit history? Social credit scoring rises as an answer.

In this report Celent analyzes Lenddo, which is one of the world's first online platforms helping the emerging middle class use their social connections to build their creditworthiness. Lenddo also moved on to help businesses and finance companies evaluate both the character and identity of customers using alternative data.

“In times where financial inclusion has become the objective of public and private sectors worldwide, nontraditional data scoring becomes a powerful tool while addressing some of the risks of lending,” says Juan Mazzini, a senior analyst with Celent’s Banking practice and author of the report. “Furthermore, it constitutes a new assessment tool in a digital world, beyond banking and into any other business where trustworthiness is a variable to consider.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

 

Key Research Questions

3

 

Methodology

5

Lenddo at a Glance

6

 

Products

8

 

Lenddo, Banks, and Microfinance

9

 

Markets

9

Social Networks and the Internet

13

A Business Is Born

17

 

The Lenddo Score

17

 

The Making of Lenddo

18

 

The Loan Process

18

 

The Support to Business Partners

19

 

IT and Operations

23

Conclusion

24

Leveraging Celent’s Expertise

26

 

Support for Financial Institutions

26

 

Support for Vendors

26

Related Celent Research

27

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