Online microfinance lending firm to expand in Phl

MANILA, Philippines - Lenddo, the world’s first  online platform that offers  microfinance services, is aggressively expanding in the Philippines as it expects its members to grow four folds next year to 500,000 from only 85,000 this year, a company official said.

“This is the first time in the world that such financing facility would be available. Our mission is to help create an economically empowered and thriving middle class in developing countries around the world,” said Erika Aquino, Lenddo business development director, in describing the first-of-its-kind financial product.

“The Lenddo community has tens of thousands of members in over 35 countries and member growth countries to double every 60-90 days. Lenddo has offices in Manila, Bogota and New York City and our investors are behind some top technology company in the world, from Facebook, Groupon to Kiva and Prosper,” she said.

She noted that community-based lending or group lending has been around for centuries but only now with the proliferation of social media, mobile computing and the deep social graphs, could it be implemented on a global scale.

Aquino noted that people in developing countries are largely still intimidated by banks.

“The middle class are typically under banked and still using the informal sector such as family, friends, 5-6 schemes for their financial needs,” she said.

To avail of Lenddo’s financial services, Aquino said one needs to sign up online and get as much as a maximum of P43,000 payable up to one year with an interest rate of 0.99 percent to 2.99 percent a month depending on the strength of the borrower’s trusted community.

Once approved, a member-borrower’s loan would be credited to his or her bank account and could pay their loans in any accredited BDO and Metrobank branches.

According to Aquino, Lenddo’s community members can use their reputation on social networks such as Facebook, Linkedin and Twitter to obtain loans for education, healthcare, home improvement/renovation, small business set-up or expansion and debt consolidation.

“By combining community-based microfinance techniques with social media profile data, Lenddo is pioneering a new approach to financial inclusion. We believe that the willingness of your community to vouch for you, coupled with how you behave online, are incredibly powerful predictors of your creditworthiness,” she explained.

At present, Lenddo provides loans in the Philippines and Colombia.  They are planning to tap two more markets, one in Asia and one in South America, by next year.

Aquino said default on loans, since they started in 2011, has been low at four percent and has been declining since then.

“Our experience to date is that majority of Filipinos in the Lenddo community pay back their loans on time, every time. The default rate is mooring that of traditional microfinance institutions which are between two to four percent,” she noted.

In the near term, she said they would want to expand their financial services to include remittances and insurance.