Carilend is a Caribbean p2p lending platform operating in Barbados, Jamaica and Trinidad. Carilend kicked-off their online lending in Barbados in 2017. In 2019, Carilend expanded into Jamaica, partnering with the VM Group and now adds Trinidad & Tobago alongside Massy Finance. Carilend utilizes Madiston software to run the p2p lending platform. The supplier stresses that this has been achieved on a single instance of Madiston’s lending technology with different currencies, different banking arrangements, different processes, all managed separately but operating within one platform. Each country offers different lending products too, from institutional lending, peer to peer lending, Buy Now Pay Later loans to salary deducted loans.
The company claims that due to automation they have managed some 50 million USD loans with minimum staff, and many of those were peer to peer loans which each have hundreds of micro-transactions to process.
Mark Young, CEO of Carilend is quoted: ‘We have worked with Madiston for over six years now and they have provided the digital lending technology on which the whole Carilend Group operates, from customer onboarding through loan servicing. It is a robust and highly flexible platform which has enabled us to keep our operational costs down, add new products as we grew and expand geographically. …. As we take our digital lending service into our third country, Trinidad & Tobago, launching the Instaloan in partnership with Massy Finance, we continue to use the reliable and innovative Madiston technology as our platform. …‘
Like several other internet companies MYC4 was hard-hit by the outage of Amazon’s Data Center in Ireland. Days later the MYC4 site is still down with only the blog (which resides on WordPress) functional.
A new US patent filed claims that may be a good idea! The patent application “System and method for assessing credit risk in an on-line lending environment” describes a risk assessment method, where the first level links on a social network would be checked for a borrower. It aims to derive insights from looking at the age and “activity” of these first level contacts.
Does What Your Friends Say About You Determine If You Are Creditworthy?
In a step further the method suggests to “invite linked users to provide a personal endorsement of the borrowing party; sending an endorsement invitation to identified users; and receiving endorsements from the identified users, the endorsement providing a rating of the user trustworthiness based on a numerical scale; determining and aggregate endorsement score from received endorsement which is included in the assessment score”
Assessment score to be used as one of several criteria
The patent filed by Canadian company Neobanx Technologies, Inc was previously already filed in Canada. Inventors Ronald N. Ingram, Dylan Littlewood and Aston Lau describe the whole process with assessment score and endorsement score being only 2 of multiple elements that are used to assess the risk.
The potential problems with using data from social networks for the purpose of risk assessment in p2p lending were already described in detail in the article: “For Debate: Can Data from Social Networks be Used to Reduce Risks in P2P Lending“. I still think that social network data could be used to some degree as additional data for lenders – but not to the degree this patent seems to imply.
It would be most interesting to see this implemented and monitor how it works out.
Notice the headline of the article. I have chosen it, because I found it hard to describe what Fidorpay is. And Fidor itself meets the broad scope of questions, that the novelty service provokes, with a main FAQ of no less than 115 questions and answers. But I’ll try my best:
Fidorpay is a prepaid e-wallet that can be used via web or mobile apps (they currently have an iPhone app and are working on android). Once a user has transferred money into this account he can send money to other Fidor Pay users.
Sounds like Paypal? There are important differences:
The Fidorpay system works nearly in real-time. That means money is credited to the receiver’s account within a very short time frame and can be used by him then. (Paypal offers fast notification, but it takes much longer for the money to be actually available in the recipient’s account for future transactions).
Sending (and receiving) money is fee free
Starting February, 1st 2011 Fidorpay users can now lend money via Fidorpay to ‘friends’
So how does the lending part work?
A Fidorpay user can ‘lend’ any amount between 5 and 500 Euro to anyone. This is possible even if the recipient does not (yet) have an account but his email-address or mobile phone number is know to the lender. Loans are interest-free. They do not have a fixed term, instead the lender can send the friend a request to repay anytime. Unlike sending money, lending is not fee-free; Fidorpay charges a one time fee of 0.49 EUR (approx. 0.68 US$).
Is this p2p lending then?
It is in a pure technical/infrastructural way, since it does enable one person to lend another person money (over a distance) via internet or mobile phone.
But it is not the p2p lending in the sense it is most commonly used in this blog for it lacks any marketplace and validation aspect. It only takes a lending process that would have offline taken place with cash handed over to a convenient online level. If the borrower refuses to repay the loan Fidorpay itself does not enforce the repayment in any way.
How is it relevant to p2p lending then?
Fidor with Fidorpay shows how an infrastructural footing for p2p lending could look that omits most of the conventional banking structure. Since Fidor has a banking license, some of the regulation requirements are solved. If all lenders and borrowers of a p2p marketplace would (mandatory) become Fidorpay users then all payments and repayments could take place inside the Fidorpay system. The process would become faster and transactions could possibly be cheaper.
Are we there yet?
Far from it. I think Fidorpay gives a glimpse of what mechanisms could be used in the p2p lending marketplace of the future. Since it is currently not a main banking connection of the customers, amounts in the wallets are small. And maximum transaction amounts are limited for security and regulation reasons.
But ‘conventional’ banks should watch out and p2p marketplaces should think and review what possibilities Fidorpay and potentially evolving similar services will offer them to advance their service.
Key data about Fidor and Fidorpay
Founded 2003 Fidor Bank AG commenced its banking activities in December 2009 and brands itself as a ‘community bank’ using web 2.0 instruments in combination with latest technology. Related video: Speech by Matthias Kröner at Finovate, London. Fidor Bank states 19,600 users at the end of 2010. The current number of users is approx. 23,000. It is unclear from the press statements if all users are paying customers.
Fidorpay is available to residents of Germany with a German bank account.
The core ingredient a new P2P Lending company needs is a platform to operate on. The importance of the quality of the software used for the success of the business is high. Not only does interaction with the customer nearly exclusively take place via the interface the website offers, but ideally most processes that are to be conducted are built into the software.
Examples for these are interfaces to external suppliers of credit ratings, accounting functionalities and interaction with necessary bank accounts, possibly document input and handling functions (e.g. income verification).
Unlike other web 2.0 startups p2p lending companies cannot launch on a rudimentally developed platform and eliminate bugs and improve functions on the fly in beta. Customer expectations regarding security, correctness and reporting functionalities are rightly high when it comes to handling their money. The expectations of the users are set by the trustworthiness of online banking services. Another factor is – depending on market – the regulation authority that might require proof for the reliability of the platform/processes
The management team has the choice between:
Developing the software inhouse
Hiring an external contractor to program the platform according to specifications made
Buying a tested and proven source code and use that as start for future development
Outsource the task to a whitelabel provider who provides the technical platform and future release improvements
Developing the software inhouse
The advantage is that the software can very specifically reflect the ideas and needs of the company’s founders. The disadvantage is the high risk to miscalculate time or budget needed.
Costs when starting from scratch are high. It has taken the p2p lending companies on average a year to develop their platforms. The SEC filings of US p2p lending companies reveal figures on software development costs.
Furthermore quality and performance issues might be underestimated requiring rework. Continue reading →
In yesterday’s newsletter Spanish p2p Lending service Lubbus (see earlier coverage) has announced that it succeeded in deploying it’s platform to 5 additional countries.
