In the dystopian future envisioned in Gary Shteyngart's acclaimed novel Super Sad True Love Story, everyone's credit scores are broadcast publicly in the streets.
Hong Kong startup Lenddo envisions an opposite future: one in which your online activity and social network connections will be privately analyzed by software to determine your creditworthiness. Today at the annual World Economic Forum in Davos, Lenddo is announcing a new service that performs exactly this type of analysis for anyone in the world with a social network presence.
Users can elect to have the company's algorithms scan their social accounts
Users of Lenddo's "social scoring technology suite" can elect to have the company's algorithms scan a variety of their online social accounts—on Facebook, Gmail, Twitter, LinkedIn, Yahoo, Microsoft Live, even all their Android phone activity—and receive a Lenddo score, a kind of proprietary credit score from 1 to 1000 (higher is better). Then, Lenddo will securely pass the score along to a second company that the user says they wish to receive credit from—say a bank, credit card company, financial institution, or even a wireless provider.
That second company can then use your Lenddo score, plus traditional credit scoring or background checks to determine how much, if any credit, to give you. Or, they can use the Lenddo score on its own.
Just who would want to turn over their social media data in exchange for a credit line? Lots of people, if Lenndo is correct, especially those in emerging markets where getting credit can be tough.
"In a lot of countries, the bulk of the population isn't covered by the credit bureau," Lenddo CEO Jeff Stewart tells Motherboard. "Even in the US, students who just graduated and new immigrants may not have a credit history, but they probably have deep social media footprints." As Stewart points out, many traditional lenders would often simply reject these people. But he hopes that Lenddo's system will give lenders a reliable way of finding more viable customers.
In practice, Lenddo says its system will work like PayPal. You would visit a lender's website, click through whatever steps they have for applying for credit, and then a box would show up asking you if you would like to use Lenddo to complete the process. What Lenddo is actually providing in this case is a snippet of code that lenders can add to their websites or mobile apps and which securely communicates with Lenddo's own system.
Lenddo won't share the specifics of its software system, but analyzing your activity and contacts across multiple social networks is key. Lenddo then uses this data to paint a much larger picture of how trustworthy you are. The system "use multiple sources to build a trust graph," is how Stewart puts it, and it is capable of digesting "hundreds of millions of connections" across multiple languages—though Spanish and English work best, Stewart says.
Importantly, Lenddo doesn't analyze the contents of your private posts and messages, or audio of your Android phone calls (Lenddo doesn't have an equivalent iPhone activity analysis tool). But much of your other digital data is fair game, if you opt in.
While that may still raise alarm bells among those concerned about their digital privacy, Stewart seeks to reassure potential customers about his company's commitment to the safety of their data. "The customer has control over it, they can disable it," Stewart says of their Lenddo score. And that's the only piece of information shared with potential lenders. "This is not a database they can access," he adds. And if the NSA or another law enforcement agency comes knocking? "We have invested way more than any startup should in housing the data in domiciles that would make that very difficult," he says.
Perhaps most importantly for Lenddo's future prospects is its past and current success. The company actually started in 2011 by issuing its own loans directly to customers in the Philippines based on their social scores, but is now getting out of that business in order to provide the back-end service for other lenders. Before it decided to stop its own lending service, it had issued around 20,000 loans at an average of about $500 per loan, Stewart says.
Lenddo's announcement today also notes that some 20 lending companies have signed-up to use its service, including Filipino savings bank Banko and Colombian bank Colpatria. And he says they are in "discussions" to provide it to companies in Africa, India, and Indonesia. "There will always be a place for credit based solely on past transaction history," Stewart concedes. "But for people who want superior access or access where they wouldn't have it otherwise, [Lenddo] is gonna make a lot of sense."