In the financial sector lending money is followed by certain rules and regulations. For an applicant who desires to borrow money, it is necessary to state the loan purpose and display a satisfactory repayment capacity. Although this necessarily doesn’t show that an applicant is eligible for borrowing, financial bodies exercise in specific manner and the process is very time consuming and rigid. To resolve this problem and improve borrower and lender relationship the P2P lending is becoming an integral factor in the financial system and breaks the financial borders.
In P2P lending a person can borrow money direct from any individual who is interested in lending. This process removes the middlemen between the lender and borrower and the role of traditional financial institution is eliminated. With the mission of bringing more flexibility into the financial sector a Swedish fintech company called Lendify has become the largest peer to peer lending platform in Sweden and a leading P2P financial service provider. The company operates an online marketplace platform that connects borrowers with investors – without the involvement of banks or credit card companies. It offers better terms for borrowers and solid returns for investors. By connecting borrowers with investors, the company aims to create a better economy for everyone.
Combination of Innovation and Uniqueness
Lending to individuals which exhibit a good credit score is a well established form of investment with a long history. What Lendify adds to this market is accessibility and distribution. By utilizing the latest technology, the company is able to connect individuals seeking returns on their investments directly with borrowers asking to lend money. All disbursed loans are collateral free. This means that predictable default rates are of utmost importance for the investors. To ensure a reliable and trustworthy credit evaluation process, the company has chosen to involve technology. One example is using an automated technique called “scraping” which enables Lendify to identify and act upon probable risk prone behaviour sourced from the potential customer’s credit card statement. If such behaviour is detected the company can decline the loan application. This serves a double purpose which is protecting the investors from future credit losses while reducing the over indebtedness of borrowers. Lendify’s credit model is conservative and roughly only 10% of the applicants are granted loan. Lendify rewards is another example of the company’s innovative solutions. In short it is a unique incentive program developed for the borrowers. The ambition is to be a positive force in helping Swedish households improve their knowledge about, and commitment to, a sound financial situation. The rewards are built on the principles of gamification and include several levels that can be achieved through meeting certain criteria. One critera is making the payments on time and if the borrower successfully pays before the due date a certain amount of points are awarded. Another way of gaining points is through taking courses in Lendify’s finance school. Awarded points can later be exchanged for a lower interest rate which makes the incentive program very compelling for the borrower, while at the same time increasing their knowledge, skill and payment discipline. Through increased education and customer loyalty the company’s low existing credit losses can decrease even further.
A Marketing Chief
Joined Lendify in June 2017 and has been part of the team that made the company achieve more than 2 BSEK in originated loans. Erik Wikander is the Chief Marketing and Product Officer at Lendify, where he leads marketing function as well as the product development team, identifying technologies that can improve customer experience and operational efficiency.
Leading with Success
According to the Lendify “the challenge is building scalable technology where the landscape is changing due to PSD2 and keeping up with open banking developments, while at the same time maintaining the existing platform.” Since 2014 Lendify has lent more than 2 billion SEK to borrowers. The global audit and consulting firm KPMG lists Lendify as one of the 100 most successful Fintech companies worldwide. It is one of 3 companies on the list from Sweden, together with iZettle and Klarna.
Higher Efficiency in Banking
Open banking will radically change customer experiences within banking, and is something that will enable Lendify to create even more and innovative customer solutions. The company sees itself as a long-term and serious challenger to the traditional banks. It wants to leave the banks behind, cut out unnecessary middlemen and provide a modern, customer centred and digital platform to make the Swedish loan market more efficient.