FriendlyScore helps you get a loan… with social media
Fin tech is now one of the most talked about start-up and tech trends. So much that it was made a separate category during the recent Polish elimination of the Central European Startup Awards. This year's winner – FriendyScore. A start-up that analyses social media to boast your credit scoring
On September 17th the Central European Startup Awards took place in Gdansk. A handful of start-ups, some of them we talked to in the recent article on innovation, received awards in categories such as hardware, big data or social impact with Quantum Lab Co. getting the Startup Of The Year award. FriendlyScore won the fin tech category – one that only recently has become an indispensable part of the start-up world. You can watch the video from this event (conducted in English) below:
Video from the Polish elimination of the Central European Startup Award. Polish start-ups entrepreneurs, investors and journalists participate in an event that took place in the Gdansk start-up accelerator STARTER. The event was conducted in English.
FriendlyScore stands out even in this fairly recent category. Its mission is to increase the ability of people without extensive banking data such as students or people from countries that lack developed banking sector to get loans. FriendlyScore uses information that can be found on their social media profiles to achieve this. How is it possible? What kind of algorithm do they use? Find out about this as well as about their business model and international expansion plans from our interview with FriendlyScore's co-founder Maciej Doliński.
Web.gov.pl: How did you come up with the idea to create FriendlyScore? How did you find this niche?
Maciej Doliński: Speaking generally, there are two reasons why we founded FriendlyScore. The traditional methods of credit scoring have become outdated. The lifestyle, especially of young people, has changed significantly. Perhaps it's not that visible in Poland, but it can be felt in countries such as the U.K, where FriendlyScore is the most active. Another case are developing countries, such as India or Indonesia, where the ability of lenders to perform credit scoring is still unsatisfactory. They need new methods. For us it was easier to enter the market as our team has a strong background in the financial sector. We could see that a lot of young people applied for loans, but due to various circumstances such as the need to move or change a job they were often turned down.
How exactly does social media help in making your credit scoring better? Why do lenders care about it?
The theoretical ability to produce enough funds to be able to pay a loan is only one of the factors lenders use to determine whether a loan should be granted or not. Another factor is our employment situation and social network of valuable contacts which may add greatly to our credibility as a potential borrower. And it’s still only a minor part of a variable set we call the professional status. It’s a constant and continous learning process to determine the network’s strength of an individual. The algorithm itself improves with every update. The more data we analyze the smarter it becomes. And this is exactly what FriendlyScore provides – an assessment of this kind of credibility.
How does it actually work from a technical point of view? How do you make the analyses?
Exactly, from the technical perspective it's a statistical algorithm based on the so called GLM type and random forests method. With the goal to find people who possess certain qualities that increase their potential credibility such as extensive network of professional contacts etc. Upon authentication by the user, we take up data from social media sites such as Facebook, Twitter, LinkedIn and Google.
Is user permission always necessary?
Absolutely. It's one of the basic rules we follow. We object to spying and acquiring information without consent. It's a primary condition for us to make an analysis.
How do you acquire business partners, namely new lenders to offer your solution to?
That's a question that would take a whole lot of time to answer. But just to scrape the surface, PR and presence at professional meetups and conferences, our own network of contacts as well as the support of our closest partners such as the Startupbootcamp accelerator we entered back in 2014. We were a part of the very first acceleration program for the fin tech sector.
How does FriendlyScore earn money?
In July 2015 we have launched sales of our software in a SaaS (Software as a service) model. Every company that grants loans may register and use the software to acquire more information about their customers. Monthly subscription varies from a couple of hundreds to a few thousand pounds depending on monthly volume and level of customization. We are already present in countries such as UK, Netherlands, South Africa, India, Romania, Germany and, perhaps soon, in Poland as well.
Do you cooperate directly with banks only or with individual users as well?
We do cooperate with businesses the most, but we also make our software available on our website so that every individual can use it to check their credit scoring for free. One of the goals of it is also to get more feedback to improve the software. We try to get as much feedback as possible. This is why there is almost always someone available on live chat to answer questions and doubts of visitors.
Are your analyses dependent on the language of social media users? Is it a serious barrier to entry?
No, not really. All it takes is to create a new language version. It's not really a serious obstacle. We already have several language versions including English, Dutch, German, Portugal, Brazilian-Portugal and Polish and there is more to come.
What else can make your activity more difficult in one country compared to another?
Law is the biggest barrier to entry usually. For example, in Australia in order to act freely, we would have to regulated by an Australian equivalent of the Polish Financial Supervision Authority. But we can still offer licenses for other companies to use the software and then it's up to them to modify it to make it satisfy the Australian laws.
Are you currently trying to acquire more investors?
FriendlyScore already acquired funding from Mercia Fund Management, one of the leading VC technology investors in the UK. We closed the first round in March this year. We're using the investment to hire even more employees and further develop the software, boast sales and so on.
What can we expect from FriendlyScore in the nearest future?
This year we're introducing PayPal and Instagram as new sources of data. But the biggest improvement will be the ability to attach bank statements to FriendlyScore in order to confirm some data that can't be verified through social media alone such as earnings and how responsible we are in terms of financial management.
Read also: The five hottest Polish fintech start-ups
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