Access to financial services is no longer a luxury but a necessity. Yet, millions of people around the globe, particularly in emerging markets, remain underserved by traditional banking institutions.
This financial exclusion can hinder economic growth, limit opportunities, and bring about poverty.
Social lending, a revolutionary concept that leverages the power of social connections and technology, is emerging as a powerful tool to address this challenge.
By bypassing traditional credit scoring methods and relying on social reputation, social lending platforms like Social Lender are democratizing access to finance.
Imagine a world where your digital footprint, your social connections, and your online reputation can unlock doors to financial opportunities. This is the vision that drives social lending platforms like Social Lender.
By analyzing an individual’s social media activity, mobile phone usage, and online behavior, these platforms can assess creditworthiness in a way that traditional banks cannot.
In this article, we’ll talk about the work of social lenders, and a explore its benefits for both borrowers and lenders.
How Does Social Lender Work?
Using Social Lender to request cash is easy and fast. If you’re a registered user on the Social Lender platform, just click the “Apply for Cash” button.
You’ll see how much money you can request and the minimum Social Reputation Score you need for a new request.
Once your cash request is approved by the Social Credit Officers, the money will be sent to your verified account.
Registration
To start using Social Lender, you need to log in with your social media profile. Right now, Social Lender support Facebook and Twitter, but we plan to add more platforms soon.
First-time users must complete a one-time registration. After that, we will conduct a Social Audit on you.
At the end of this audit, you’ll receive a Social Reputation Score based on our unique algorithm.
The more accurate information you provide, the higher your score will be.
Here are the requirements:-
- Basic user details
- School and work information
- Phone number verification
- Bank account details
We’ll also gather extra information from your social media profiles (with your permission).
Note: The Social Credit Officers will review all the information you provide before approving any cash requests.
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Social Lender Dashboard
After you register, Social Lender calculates your Social Reputation Score, which you can see on your dashboard.
There are also links to apply for cash, verify your bank account, and more.
You can add more information later to improve your score.
Getting a Cash Request
When you make a cash request, you will be asked for some basic information. Before approving your request, the Social Credit Officers will conduct a thorough Social Audit. This includes checking your social reputation and that of any guarantors if needed.
The final decision on each cash request is made by the Social Credit Officer. Some users may need to provide additional “Social Collateral” to qualify for a cash request.
If your application is approved, the money will be transferred to you through regular banking channels.
Cash requests on Social Lender can be between 1,000 Naira and 100,000 Naira. For first-time users without Social Guarantors, the maximum is 3,000 Naira, and for the first few transactions, it’s limited to 10,000 Naira.
As users make successful transactions more often, the maximum amount they can request increases.
Cash Request Disbursement
When a cash request is approved, the money goes directly into the requester’s bank account. This account is checked during registration.
Users receive their funds through regular banking systems, and how long it takes to get the cash depends on the partner bank (Sterling Bank), usually around 30 days.
There is a service fee that varies based on the partner’s terms. The transaction charge for each cash request can be between 5% and 20% of the amount requested.
Cash Request Repayment
Users can repay their cash requests using various banking methods, such as mobile money, bank transfers, online payments, and in-person deposits at bank branches.
If a user cannot repay the cash request within 30 days, they must roll over the request, which may be treated as a new request.
However, they still need to pay the transaction charge by the end of the 30 days, even if they haven’t repaid the main amount.
If a cash request is not repaid (called ‘Unserviced’), Social Lender will start the process to retrieve the money as outlined in the Social Lending Agreement.
What are the Social Lender Channels?
Social Lender primarily uses digital channels to provide its services. Here are the main channels they use:
1. Web: Users can access Social Lender’s services through their Web App from your internet browser to apply for Cash. Available Clients are:
- Sterling Bank (Nigeria) at sterling.sociallenderng.com
- Absa Barclays Bank (South Africa) at absapoc.sociallender.co.za
- iTrust (Nigeria) at itrust.sociallenderng.com
2. Mobile App: Share your mobile data with Social Lender to Improve your Social Reputation Score. Download the Social Lender Data Manager on Google Play Store – bit.ly/sldatamanager. IOS App.
This app enables users to apply for loans, make repayments, and monitor their account activity.
3. USSD: Users can access Social Lender’s services via USSD codes, which can be accessed from any basic phone. This channel is particularly useful for individuals without smartphones or internet access.
Dial *348*3# to access the USSD2Loan Channel (available in Nigeria for now). More Telcos are coming on the USSD soon.
4. SMS: Get a loan of up to N10,000 guaranteed by your social reputation. Just text SOCIALLENDER + [SPACE] + AMOUNT to 30812. You can also register and obtain a Social Reputation Score via our SMS2Loan Solution.
However, more channels like internet banking, pay with social lender, and ATM will soon be available too.
Benefits of Social Lender for Borrowers
Social Lender offers several benefits to borrowers, such as:
1. Quick and Easy Access to Funds: The application process is streamlined and approval decisions are made quickly. Funds are disbursed directly to your bank account.
2. Flexible Loan Amounts: Borrowers can request loans ranging from N10,000 to N100,000, depending on their social reputation score.
3. No Collateral Required: Unlike traditional bank loans, Social Lender does not require any collateral, making it accessible to a wider range of borrowers.
4. Transparent and Competitive Interest Rates: The interest rates are transparent and competitive, ensuring fair borrowing terms.
5. Improved Financial Inclusion: Social Lender aims to bridge the gap between the banked and unbanked population, providing access to credit for those who may not qualify for traditional loans.
6. Building a Positive Credit History: Timely repayments can help borrowers build a positive credit history, making it easier to access larger loans in the future.
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Benefits of Social Lender for Lenders
Lenders also stand to gain significantly from participating in social lending platforms like Social Lender. Some of the benefits include:
1. Increased Lending Reach: Social Lender helps financial institutions reach individuals who are underbanked or have no access to formal financial services. This expands the potential borrower base and allows lenders to tap into a previously underserved market.
2. Improved Risk Assessment: Social Lender utilizes a proprietary algorithm to analyze a user’s social reputation on various platforms. This provides lenders with a more comprehensive understanding of the borrower’s creditworthiness, reducing the risk of default.
3. Streamlined Lending Process: Social Lender’s digital platform simplifies the loan application and approval process, making it more efficient for both lenders and borrowers. This reduces administrative costs and speeds up the time it takes to disburse funds.
4. Enhanced Customer Experience: Social Lender offers a convenient and user-friendly experience for borrowers, making it easier for them to apply for and manage loans. This can lead to increased customer satisfaction and loyalty for lenders.
5. Potential for Increased Revenue: By expanding their lending reach and reducing risk, lenders can potentially increase their overall loan portfolio and generate higher revenue.
6. Social Impact: Social Lender contributes to financial inclusion by providing access to credit for individuals who may not have been able to obtain loans through traditional channels. This can have a positive impact on economic development and poverty reduction.
Comparison with Traditional Lending Platforms
When comparing social lending platforms like Social Lender with traditional lending models, several distinct differences emerge, such as:
1. Differences in Approval Processes
Traditional banks often require extensive documentation and collateral before approving loans, leading to lengthy approval timelines that can take days or even weeks.
In contrast, Social Lender’s approval process is significantly faster due to its reliance on social reputation rather than physical assets.
2. Flexibility in Loan Terms
Social lenders generally offer more flexible loan terms compared to banks.
Borrowers can negotiate repayment plans that suit their financial situations better than rigid bank policies allow.
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Challenges and Considerations for Social Lender
Despite its many benefits, social lending does face challenges that both borrowers and lenders should consider. They include:
1. Data Privacy Concerns
The use of personal data for credit scoring raises significant privacy concerns. Recent incidents have highlighted breaches where companies mishandled sensitive information or engaged in unethical practices regarding data usage without user consent.
To avoid these risks, it is crucial for platforms like Social Lender to implement robust data protection measures and adhere strictly to privacy regulations.
2. Regulatory Environment
The regulatory landscape surrounding digital lending is evolving rapidly, with new laws being enacted globally to govern these practices.
Compliance can pose challenges for platforms like Social Lender as they navigate varying regulations across different jurisdictions while ensuring they protect consumers’ rights effectively.
Conclusion
Social Lender represents a significant advancement in the realm of finance by harnessing the power of social networks to facilitate lending for both borrowers and lenders alike.
By improving access to finance for underserved populations while providing lenders with opportunities for positive impact and enhanced returns, social lending has the potential to reshape how we think about credit in our communities.
Looking ahead, trends indicate continued growth in this sector as technology advances and more individuals recognize the value of leveraging their social capital in financial transactions.
Innovations such as blockchain technology may further enhance transparency and security within these platforms, paving the way for an even more inclusive financial future.
Frequently Asked Questions
1. What is Social Lending?
Social lending refers to peer-to-peer lending where individuals lend money directly to others without going through traditional banks or financial institutions.
2. How does Social Lender determine creditworthiness?
Social Lender uses a proprietary algorithm that assesses an individual’s social reputation score based on their online presence and community connections rather than traditional credit scores.
3. What types of services does Social Lender offer?
Services include credit (loans), savings accounts, leasing options, and insurance products tailored specifically for users lacking access to conventional banking services.
4. What are some risks associated with using Social Lender?
Risks include potential data privacy issues related to personal information used in scoring systems and navigating an evolving regulatory environment governing digital lending practices.
