Ever since banking came into existence, we forgot the traditional way in which we borrowed money directly from family or friends. Anything that is even remotely connected to money is now connected to the banks and it has become an unavoidable intermediary. Over time the banks have flourished but the opportunities for the common people have declined.
The solution to this problem is peer-to-peer lending or social lending; it has existed since 2005 and has vastly spread into the banking sector, essentially because it cuts out unwanted middlemen like the financial institutions. The person-to-person loans grant the borrower a chance to get a lower interest rate and also helps profit the financier.
Lendify acted upon this international phenomenon and became one of the largest players in Sweden, building the next generation banking through their platform. The company is providing a fair chance for Swedish households to avoid any hidden charges or unsatisfactory terms required by the banks.
How it all began?
Lendify began its operations in April 2014 with a group of people who share the same vision of creating an efficient and fair marketplace for loans. Within two years, the company had the official launch of its website and was ready to offer its services. In the same year, investments started pouring into the company and by 2019 the company went from $20M in lending to $200M and became a “standout star” in the challenger bank category.
Towards the end of 2017, KPMG listed Lendify as one of the 100 most successful Fintech companies in the world. Since then the company had a series of investments and emerged as one of the most prominent startups in Sweden. Today, Lendify partners with Avanza, largest stockbroker and brokerage firm in Sweden.
Backed by constant success, Lendify had its fair share of troubles during their inception as a peer-to-peer lender. One of the main roadblocks that Lendify faced was dealing with the regulatory bodies in order to gain access to the same data and processes as incumbent challengers. But today Lendify is a leading name in the development of advanced credit scoring.
Revolutionizing peer-to-peer lending industry
Traditionally, financial institutions offer a loan based on the credit score of an individual. A good score will get you a loan easily. Lendify too works on the same principle but adds tremendous accessibility and distribution by adding technology to it. Lendify works by connecting individuals who are seeking a return on their investments directly with the borrowers, who are in need of money. These disbursed loans are collateral-free; therefore investors rely on predictable default rates by large.
But Lendify ensures that the credit evaluation process happens with the help of technology and therefore eliminates any risk prone customer using an automated method called “scraping” which analyses the customer’s credit card statement and declines if needed. Thus, protecting the investors from incurring any credit loss and removes the possibility of over-indebtedness from the borrowers.
According to Lendify’s credit model, only 10% of applicants are granted the loan.
Lendify has an incentive program known as ‘Lendify rewards’ developed to suit the borrowers. The company aims to educate Swedish households about the financial structure. The rewards program is gamified with several levels and can only be achieved by meeting certain criterias like making the payment on time and through taking courses in Lendify’s finance school. These award points may be further used for gaining low-interest rates which can be stimulating for a borrower. This innovative approach helps in educating the customer and also decreases the company’s low existing credit losses.
Evolving with the world
When the European Union revised the Payment Services Directive (PSD2), there was a paradigm shift in the payments industry and the challenge for Lendify was to build scalable technology, while maintaining the existing platform.
“Open banking will radically change customer experiences within banking and is something that will enable Lendify to create even more and innovative customer solutions. The company sees itself as a long-term and serious challenger to the traditional banks. It wants to leave the banks behind, cut out unnecessary middlemen and provide a modern, customer-centered and digital platform to make the Swedish loan market more efficient,” says Nicholas Sundén-Cullberg CEO and Co-founder, Lendify
Secret Recipe for Success
“We believe we can grow and be efficient at the same time,” stated Nicholas.
The outstanding growth that Lendify has is proof of that and since 2014 the company has lent more than 2 billion SEK to borrowers and their loan book is a quantitative measure that marks Lendify as one of the fastest-growing lenders in northern Europe.
Nicholas ensures the company’s success by hiring the smartest people and by staying ahead of the competitor’s growth curve. But a company’s success can’t just be attributed to its employees alone, customers are an unavoidable entity in any business and hence, Lendify focuses on consumer protection equally. Their loyalty program “Lendify Rewards” reflects the company’s social commitment.
Leading the path
Nicholas Sundén-Cullberg founded Lendify in 2014 with two other co-founders. He is an ex-Morgan Stanley (investment banking). At Lendify, he was the COO until 2017. He took on the role of CEO and has been instrumental in building Lendify. He has a Masters in Business and Economics from Stockholm School of Economics.
“Smarter economy together.”
“Lendify offers better terms for borrowers and solid returns for investors. By connecting borrowers with investors, the company aims to create a better economy for everyone.”