Podcast: Automation and Alternative Scoring in Crowdlending with Elena Ionenko

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TurnKey Lender’s Elena Ionenko joined the Do You Speak Crowdlending? podcast hosted by Ghassen Benhadjsalah, the CEO and Co-Founder of Acredius, a crowdlending platform based in Zurich.

The discussion revolved about the ways in which p2p lending is positioned to help the economy and the communities get back to normal after the COVID-crisis. Elena shared a view that even though peer-to-peer lenders can grow their business in this economy, they can only do it with the right technology. An important example is the use of alternative credit scoring approaches. Elena comments:

Thanks to our end-to-end technology we can see the performance of loans from application processing to the complete repayment. This way we can analyze how different data points affect creditworthiness. We’ve been working with traditional credit scoring approaches from the very beginning as well as alternative scoring data. And the majority of lenders were relying on traditional risk evaluation approaches. ” –  remarks Elena, –  “The very basis of this analysis – historical stability becomes somewhat irrelevant. We cannot rely on historical data cause during the crisis different businesses cope differently. That’s why the value of alternative scoring becomes relevant. Before it was used more as a complementary tool, now they rely mostly on alternative data. For example, bank statement data can give us a real-life snapshot of the company’s performance and we can see how they cope and what the chances of them becoming a good borrower are. ” 

When asked how the p2p lending industry is changing in 2020, Elena said: “The demand in the US is great. That’s why we’ve decided to set up a local office. The surge of p2p lending is similar to what happened after 2008. When small businesses were looking for finances and traditional lenders couldn’t provide loans. Then p2p lenders stepped in and helped overcome that crisis. The corona-crisis is acting as a catalyst for this industry as well. All the different p2p lenders were affected differently, but especially those who relied on traditional credit scoring approaches, so they don’t know anymore, who’s good, who’s bad.”

Elena continued to explain that the more forward-looking, started using alternative scoring approaches early and were able to adjust, and review their credit policies quickly. Entering the new post-COVID economy, they are actually well-positioned for growth. The global p2p lending market is expected to grow tenfold within ten years so the future for the industry is promising. And those who are able to act quickly will be fine and will grow.

Our model is also different. We don’t charge a flat fee. Our pricing model is tied to the portfolio. So the bigger you are, the smaller percentage we charge for our technology. So it’s a win-win situation. Our price is success-based.

Listen to the full podcast on YouTube:

 

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