THE MODEL: A digital
banking platform for those who do not have a credit rating. ‘Underbanked’ users
are given a credit score using big data analytics which is updated every second.
Over 20,000 data points are assessed in arriving at the score. Based on this, loans
are given using algorithms almost instantaneously. Other than this, users are
given a host of services which banks offer such as tailored financial products,
personal finance management solutions, an e-wallet and so on.
STARTUP: Kreditech
(German startup)
WHAT I LIKE
Core Idea – Solving
the problem with existing banks is a big and untapped market. The large target
market of people not having a credit score is neglected by the banking system
as of now.
Addressing Serious
Flaws – The startup is built on some flaws in the existing system. People
without credit scores are not considered by banks for loans, credit ratings are
static and based on limited factors, long loan approval and disbursement cycles
etc.
End-to-End Services –
The startup has expanded to offer a gamut of banking services such as personal
finance, digital wallet, financial products etc.
CONCERNS
Competition – Banks will always pose a threat to the
startup as they have more resources and influence and a big customer database.
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