Startup Street: This Startup Can Get You A Loan Based On Your Social Media Activity

This week on Startup Street, a fintech startup is willing to give you a personal loan just by looking at your salary and social media accounts. The co-founder of pop music band Black Eyed Peas is now advising a Montgreal-based startup. And the Telangana government just released a draft Blockchain policy on the internet.

Here’s what went on...

Your Facebook Account Could Get You A Personal Loan

LoanTap, a three year-old Pune-based startup, is handing out unsecured personal loans based on people’s social media activity.

While banks typically depend on credit scores, bank account statement, and income tax returns, some fintech firms are using algorithms to come up with dynamic credit scores that effectively evaluate a customer’s credit worthiness.

LoanTap uses an amalgamation of the both, Co-Founder and Chief Executive Officer Satyam Kumar told BloombergQuint. While it assess a customer’s application based on a few traditional methods, the digital non-banking financial company also uses algorithms to collect supporting personal, professional and financial details of the potential borrowers. The list of terms assessed can include social media profiles like Facebook and LinkedIn, friend list, longevity of accounts, lifestyle details and activity, among others.

Yet, defaults remain a concern. “Our business is a risk business,” Kumar said. “Defaults are bound to happen.”

“About 50 percent of our first-level default gets paid by informing the customer. It doesn’t require deep collection ecosystem set up,” Kumar said. For the rest, the company has tie-ups with collection agencies who help in case of serious defaults, he said. “Most of the payments for us, or 97 to 98 percent of our dues, gets collected in this fashion.”

“The consumption pattern is shifting. People have specific needs and that is what they want to meet,” Kumar said. “People seek convenience in getting loans through online platforms.”

There is a behavioral change in customers, Kumar said, adding the digital loan market has grown to 48 percent from 33 percent in three years of LoanTap’s business.

The company also customises the monthly payment of installments according to the client’s convenience.

LoanTap, however, is witnessing some gaps as new fintech startups are entering the online lending space, Kumar said. There are some trust issues on the institutional level for new fintech startups, he said.

Even then, customers are open to approach fintech lenders, he said. “We are here to build a long-term institution, and are not aiming for a market dominant kind of ecosystem. We understand salaried space more and we are keen on building a narrative in the same.”

LoanTap raised about Rs 57 crore in its fifth round of fundraising in January this year. It’s backed by investors such as Kae Capital, India Quotient, Tuscan Venture and angel investor Ashish Goenka, among others. The company aims to disburse loans worth Rs 800 crore in the ongoing financial year against the Rs 230 crore it lent so far.

Black Eyed Peas’ Co-Founder Is Now A Startup Advisor

Remember Will.i.am from Black Eyed Peas? The lead singer of the band credited to hits like Pump It and I Gotta Feeling?

He is now all set to join a Montreal-based startup’s board as an ethics and bias advisor.

The Grammy winner, who also has an artificial intelligence tech company of his own called i.am+, has joined Stradigi AI, saying he was impressed by the startup’s work on image recognition and fraud detection when he first met its executives, according to a Bloomberg report.

The musician has also invested an undisclosed amount into the startup.

The artist-turned-entrepreneur, in an interview to Bloomberg, said he will come to Montreal at least four times a year, playing a role that could range from making sure image recognition has been tested on enough skin tones, to keeping concerns on the impact of AI on under-served communities to the forefront.

AI is “a new way of looking at computing, and with that you need guidance on keeping people first, and that’s a lot of things that we’re going to be doing together,” he said. “When you develop these tools and these systems, think about how it impacts society as a whole.”

Telangana Releases Draft Blockchain Policy

The Telangana government has released a draft policy on the blockchain technology, under the overall IT policy, according to a PTI report. The policy focuses on attracting firms and encouraging startups working in the field.

Blockchain is a very relevant technology. (There are) many areas where this technology is proving to be a real game-changer, a government official told PTI.

The draft policy has been posted on the internet, inviting comments, suggestions from all stakeholders, he said, adding the useful suggestions would be incorporated in the final policy.

Ever since the virtual currency boom between 2016 and 2017 highlighted the related blockchain technology, countries and government, despite their views toward bitcoin and other virtual currencies, have acknowledged the usefulness and scope of blockchain.

Globally, investments in blockchain-related startups have seen a massive surge, touching over $20 billion, the National Association of Software and Services Companies said earlier this year in the India Blockchain Report 2019. More than half of all blockchain-related investments in India have been driven through the public sector with many supported by the state government, the report said.