Introducing LendLedger
An open, decentralized alternative to intermediaries and lending platforms. Solving multi-trillion dollar credit gaps with Open APIs, Stellar blockchain technology, and a new digital asset (LOANtokens).
LendLedger is a new venture I’m proud to be a part of. More at www.lendledger.io or on Telegram at https://t.me/lendledger
The problem
In most emerging markets, a relatively small number of households and businesses borrow from banks. Most potential borrowers are too small and/or operate in the “informal sector.” They usually have no official credit history nor traditional financial documentation. Even if financial institutions want to serve these Borrowers, it’s generally unviable. The cost of collecting and verifying information about them (origination cost) is too high.
The loans which informal and small business borrowers want from institutional lenders, but cannot get, are valued at trillions of dollars. Friends, family, and local moneylenders fill these gaps, but at a high cost. They offer amounts which may be inadequate, they place a heavy social cost to borrowing, and they often charge onerous interest and security.
Banks and other regulated institutions could dislodge informal lenders and offer better services. But to do so, and tap this vast market, they need low-cost, reliable ways to assess Borrowers.
A solution on the horizon
Informal and small borrowers now use services that capture and store their financial data. For instance, small shopkeepers in India, Kenya and China are increasingly accepting electronic payments. When a customer pays with a debit or credit card, or mobile wallet, the sale is recorded. Similarly, when a small business pays a supplier electronically, a record of the inventory expense is stored.
Electronic payment networks such as Paytm, bKash, Alipay, and WeChat Pay are amassing troves of sale and expense data for informal customers and small businesses. Supplier networks and e-commerce sites are doing the same. If shared, this data could help Lenders assess the creditworthiness of informal Borrowers. Yet this data is not accessible to most Lenders, nor shared with credit bureaus.
Gradually, Lenders in some markets are forming bilateral partnerships with data providers. But the slow, uncompetitive nature of the process limits the scale of this lending and excludes smaller data sources and specialized lenders.
Meet LendLedger
The LendLedger Protocol is a suite of Open APIs that connects Data providers, Lenders, and Borrowers in underserved lending markets. It is an open alternative to central intermediaries and lending platforms.
Borrowers, Lenders, Data Providers and other service providers use the LendLedger Protocol’s APIs to share data and transfer value. In doing so, they record every interaction on the Stellar decentralized ledger. This gives the parties a permanent, transparent record of their dealings (ie reputations) that they can trust, even if they don’t trust each other.
(NOTE: individual and business credit data is encrypted and shared securely between parties. It is only shared when the owner of the data (i.e. the Borrower) consents, and it is NOT stored on a blockchain, so it is never public).
When a gatekeeper or market-maker is out of the picture, lending costs are lower, transactions have less friction, and market players interact in more creative ways. The Protocol’s open architecture lays a foundation for Lenders and Borrowers to structure almost any loan type, and for virtually any type of data or service provider to participate.
Join us
With LendLedger, we’re trying to change the face of lending for unserved segments. Our software for data providers and lenders has processed tens of millions of dollars in loan requests for hundreds of thousands of borrowers and resulted in loans to informal and small business borrowers in 400 cities across India. Get in touch as we open up new markets across the world.
BitcoinTalk: https://bitcointalk.org/index.php?topic=4424652.new#new
Website: http://lendledger.io/
Telegram: https://t.me/lendledger
