Emergence of online financial exchanges has created many alternate opportunities for lenders and borrowers. The recent Peer to Peer Lending or P2P Lending model based on online platform is a hugely successful one and has created lucrative opportunities for FinTech start-ups. There are at least 175 registered P2P platforms in South Korea. Seoul based start-up, Lendit has developed and operates an online platform that offers peer to peer consumer lending services. The company provides an alternate platform for borrowers and investors.
The company was launched in 2015 by Kim-Seong Joon, who was inspired by Lending Club, a USA based company. Kim estimated that the P2P market in Korea has potential to grow multiple fold over the years. And so it has been as Lendit is now the country’s top marketplace lender in the consumer lending segment.
Lendit operates a fully online platform where investors
can provide capital to people seeking loans.
Through the company’s advanced risk ranking algorithm and cost- effective operational process, borrowers have access to an appealing interest rate and investors are able to enjoy high and stable yield. The borrowers are offered an APR between 4.5% and 18.0%, and investors an average return of over 10%, which is much more lucrative than a traditional banking system.
Currently Lendit offers only personal loans through its platform. The lending platform claims to have about 40 % share in the P2P personal loan sector in the country. Lendit has raised 10 billion won or $8.9 million from a group of investors including a Silicon Valley-based investment firm – Altos Ventures. Local venture capital fund Collaborative Fund and YellowDog and a New York-based firm have also contributed to the Series-B financing.
“We aim to cement Lendit’s position as the top lending startup in consumer financing by using the funds to boost R&D and foster professionals for tech and finance,”
Kim Sung-joon, CEO & founder of Lendit had said it in an interview earlier.
In order to match lenders and investors, Lendit has developed and provided a real-time distributed recommendation system based on sophisticated big data analysis. In particular, it delves into financing and analyses the financial data and behaviour pattern of each lending customer, and thoroughly informs the optimised interest rate calculated reasonably. The borrower goes through a review process is conducted in three stages. First, based on financial information provided from Nice Credit Rating, a second screening of the calculation of the loan CSS rating. Finally, it is necessary to examine documents such as proof of employment of the loan customer and proof of income, and apply the application fraud prevention system. Through rational screening and cost reduction, the interest rate is reduced to one-third of the second financial sector.
The start-up wants to focus on investing through the portfolio. It is a real-time, automatic, distributed investment system that allows investors to freely adjust individual bonds according to the investor’s propensity to invest. The degree of freedom of investment has increased significantly and investors can choose one of three customised portfolios, look at individual bonds, subtract or adjust the amount of investment, and construct a personalised investment portfolio by themselves. It is designed to ensure stable investment with low probability of loss of principal and realisation of investment income. The company wants to concentrate towards creating better technical analysis system which can help reduce cost and raise returns for investors.