Lenddo stops lending, now helps clients determine customer trustworthiness

Since its launch three years ago, Philippine startup Lenddo has become known for developing algorithms that determine people’s credit worthiness based on their social media presence. It has grander ambitions for its technology, however.

The business initially marketed itself as a new way to obtain loans, lending money to individuals mostly from the emerging middle class. These individuals are normally shunned by banks because they have no banking history on which to base how faithful they’d be in fulfilling their obligations.

Lenddo uses algorithms that pull and analyze data from these people’s social media accounts – who their friends are, how often they interact, their interests – and turns the information into a rating or score that says if they’re likely to pay back or default on their loans. Or in other words, if they are to be trusted.

“As we processed thousands of loans, our algorithm got better,” Lenddo business development director Anthony Noel tells Tech in Asia, noting that the startup’s bad loans ratio was better than the microfinance industry’s average.

Now that the startup has proven its algorithms work, it has decided to focus on this aspect of the business and sell the service to other industries that have use for it, not just banks. Starting this month, Lenddo will no longer lend money. It sold its loan portfolio to BanKO, the mobile phone-based savings bank of the Philippines’ Ayala group, which also partly owns Lenddo through accelerator Kickstart Ventures. This means BanKO and other banks will now only use Lenddo as a screening system for lending to the unbanked population.

Apart from banks, here are other businesses that could use Lenddo’s algorithms:

Telecommunications companies

Noel says Lenddo serves as a tool for telcos in verifying the identities of postpaid plan subscribers and their ability to pay. In fact, the platform counts Ayala unit Globe Telecom as a client. “Telcos may use Lenddo in lieu of documentation requirements at stores.”

Ecommerce sites

A lot of fraudulent transactions are happening on ecommerce sites. Credit card fraud is probably the most common of scams. Thieves can get their hands on people’s card details and use those to pay for goods on the internet. On the other end, can one be sure a merchant sells authentic products? “There is a need to verify both the buyer side and the seller side,” says Noel. “Lenddo ensures both parties are credible.”

Online dating sites

In this day and age when location-based dating apps are popular, Lenddo can act as a gatekeeper to keep meetups safe. According to Noel, Lenddo “helps authenticate identities of the subscribers of dating services.” It helps to know you’re meeting a person who’s trustworthy and has no criminal record.

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