LendingPoint: AI-driven, CreditTech

LendingPoint: AI-driven, CreditTech

How LendingPoint is using AI and smart data models to drive fair credit decisions - within only four seconds - for US-citizens who need it most

What can you do in four seconds? Make a contactless payment for your latte, take a snapshot with your smartphone and get credit approval from LendingPoint. Four seconds is the time it takes for this US-based “non-traditional lender” to offer its customers credit, according to KN Kasibhatla, Chief Technology Officer of LendingPoint.

The customer-first approach used by LendingPoint harnesses the power of Artificial Intelligence (AI) and data models to offer credit to those who are tackling a home improvement project, consolidating debt, or paying for an unexpected medical expense (and much more), and moves away from the Fair Isaac Corporation (FICO) evaluation model to approve credit. A FICO Score is a three-digit number based on the information from credit reports and traditionally used by lenders across the US.

“Based on your credit profile and information on your application form, it only takes four seconds to get an approval on the LendingPoint platform,” said Kasibhatla, who has experience in both technology and finance.

“We believe in using AI and data models to deliver money to people whenever and wherever they may need it. We use technology to drive these decisions. To do this, we have collected more than 60 billion data points on our consumers.

“Our algorithms give us access to credit that other people don’t have access to and we are able to do this profitably. This is big news in the FinTech industry where most of the players are not profitable. We are able to serve our customers and make money while we are doing it,” said Kasibhatla speaking from his office in metro Atlanta,  Georgia.

Founded in 2015, LendingPoint recently surpassed US$4bn in loan originations this year. It was built on the principle of providing fair credit to people who had fallen through the FICO net but were deserving of credit to help with medical bills or home improvements. Since then, LendingPoint has broadened their customer base to serve FICO ranges between 575 – 850, and added working capital financing options to small businesses. 

“At LendingPoint we provide unsecured personal loans for consumers across the credit spectrum, many of whom are people the more traditional banks don't pay attention to.

Banks are very good at giving money to those who have money - we focus on serving the people who need money,” commented Kasibhatla.

By combining technology and proprietary algorithms, they are driving a better lending and borrowing experience by finding more reasons to say ‘yes’ to their customers and are now serving hundreds of thousands of people.  LendingPoint also works with small business and merchant point-of-sale lending solutions to further unlock access to affordable loans.

 

Digitisation with a human touch

Kasibhatla, who focuses on all aspects of technology from development, support, data science, and analytics, pointed out that as a relatively new company, LendingPoint has the added advantage of being cloud-based from the beginning so there has been no legacy architecture to wade through.

“We were founded by people who believed in big data and using non-traditional data to determine people's creditworthiness and we have always been a cloud-based company which has been an advantage for us,” said Kasibhatla.

“We have never had any infrastructure on the ground and started out as a purely digital experience. But one of our interesting twists is that we also talk to consumers over the phone and listen to their challenges and try to solve them. I like to think of this as digitisation with a human touch. The FICO score is now less than 5% weight in our models as we work in non-traditional ways to measure somebody's ability to pay back.

“The point-of-sale and e-commerce have evolved over time. It started directly with the consumer, then they came through a website, where they could apply for their loans and get money. But as our consumers' needs started evolving we expanded into the areas popular with our consumers. We're very focused on providing access when they need it most, that is why we entered the point-of-sale and e-commerce spaces.

“During the pandemic, buying via e-commerce became a necessity and has remained a high-demand preference . We followed customers online and increased our offerings to include a working capital solution to online sellers.” 

Kasibhatla pointed out that 99% of the total credit applications are digital with 63% of those now starting on mobile. “We have seen this transition from a website-driven to a mobile-driven digitalisation and that requires a more specialised way of presenting our brand and how we engage with and deliver for our customers.

 

How loyalty pays off for LendingPoint

LendingPoint takes pride in its customer experience, and it shows, 26% of their platform originations in Q2 came from their current customer base. The company has a focus on AI and data on their e-commerce and point-of-sale to retain and attract customers across the US.

“We focus heavily on how we talk to our consumers, how we treat our consumers, what their experiences are that they want to come back and do business with us. We treat our customers in a way in which we would like to be treated ourselves. That’s an important part of our core work ethic.”

Commenting on how their credit rating varies from FICO, Kasibhatla said: “FICO is a look back, while we look forward and ask – ability versus intent to pay back. Our goal is to make sure we set up our customers for success, we don’t want them to overextend. 

“That trust becomes a two way street. So our customers want to stay with us longer, and trust us enough to have multiple financial products,” said Kasibhalta who pointed LendingPoint is on an aggressive growth trajectory doubling originations this year.”

 

Long-term partnership with Trantor

Kasibhatla commented on the value of their long-term partnership with Trantor - an IT consulting company that focuses on digital transformation - the company has been with LendingPoint since day one.

“They have been an important part of our success and have worked across the company and built strong relationships throughout - they almost feel like an extension of LendingPoint. They work across marketing, legal, customer experience, product, and risk which allows them to understand our business goals. By being embedded in our processes they are able to become part of the extended ecosystem that we have here and help us solve the business problem.”

 

When its smart to be dumb 

Kasibhatla believes asking simple questions always results in smarter solutions for a company which has benefited LendingPoint as they have embarked on their digital journey to make financial freedom easier for their customers.

“When I came to LendingPoint it enabled me to ask the dumb questions as I am not from this industry. It allowed me to ask questions and get down to the answers that lead to better solutions, not just for our customers, but also for our employees,” said Kasibhatla whose role covers all aspects of technology from development, support, data science, analytics, and cybersecurity.

“In business sometimes people do things just because that's how they've always done them. FinTech is a very disruptive industry, so it's always good to ask the questions, there are no dumb questions - the answers will always surprise you. That's the only way you learn,” said Kasibhatla.

Kasibhatla joined LendingPoint 10 months before the pandemic and came from a diverse career background having worked in telecoms and marketing. Although he had studied finance he had always stayed on the technology side of the industry.

“This industry is an amazingly fast moving and innovative industry - that’s what attracted me to this particular vertical. The old ways of doing business are being torn down every day. We are constantly seeing new ways of servicing our customers and using technology to deliver what they need at that point in their journey is pretty amazing.”

 

Planning proved key to navigating pandemic 

Despite starting with LendingPoint a few months before the pandemic, this challenge did not side-step Kasibhatla as he had learnt to plan and prepare for the unexpected thanks to the inspiring leadership of his former CEO. 

“In my early days I had a CEO, Leo Cyr, who had been a marine. He always had us plan and prepare and be ready for unexpected contingencies. I worked for a telephone company at the time and this helped us to survive when a direct hurricane hit the data centre. We managed to keep our network running throughout that time and that helped me when the pandemic hit. 

“In early January, 2020, nobody would have thought the whole world would be working remotely. Now, everybody's living on Zoom calls and technology enables those things. Sometimes, it takes a catalyst like the pandemic to drive these changes. 

“My role is to make sure the tools are there for my colleagues to do their job and the customers to access fair credit. When we had to go remote, we had all the tooling already in place for the call centre to operate normally.

“The main job of technology is to enable people to do their jobs. From our consumer's perspective, it's not just the cool looking screen, you've got to make sure that they experience the workflow, processes, everything else behind the screens is aligned to give them a good experience. 

“We take real-time feedback from our customers on a bill log, we track everything so we know what's going on, where the friction points are, and we address those things on a continuous basis. Our goal is to provide a fully automated approval process, that's where AI comes into place, not just on the approval side, but also on the backend side to make sure we are able to remove friction points and make it a more pleasant journey for our customers using AI and data. We try to make it flexible and fast for them.”

As Kasibhatla effortlessly drives the technology behind the algorithms at LendingPoint, it won’t be long before they are offering credit options within three seconds of logging on - watch this space. 

 

LendingPoint in focus

LendingPoint is a provider of unsecured personal loans for consumers and small business owners across the credit spectrum. By combining technology and proprietary algorithms, they work to drive better lending experiences and financial freedom for their customers. 

 

Borrowing range

Personal loans range from US$2,000 to US$36,500. The loan amount approved can depend upon an individual credit profile and the information provided during the application process. Lending Point takes several factors into consideration including a customer’s current DTI (debt-to-income ratio) and PTI (payment-to-income ratio).

 

What states do LendingPoint offer loans in?

LendingPoint offers loans to consumers in 48 states and the District of Columbia. Currently we do not offer loans to consumers in Nevada and West Virginia.

 

How does LendingPoint keep personal bank information safe?

LendingPoint takes extensive precautions to protect personal information using robust industry-leading procedures and safeguards, including encryption, to secure and protect your personal information.

 

What is a FICO score?

Thirty years ago, the Fair Isaac Corporation (FICO) debuted FICO Scores to provide an industry-standard for scoring creditworthiness that was fair to both lenders and consumers. 

A FICO Score is a three-digit number based on the information in your credit reports. It helps lenders determine how likely you are to repay a loan. This, in turn, affects how much you can borrow, how many months you have to repay, and how much it will cost (the interest rate).

This traditional score is used by 90% of banks in the US LendingPoint is now using data and technology to drive decisions on offering credit to many citizens who have been refused credit using this score.

“We believe in using data and technology to deliver money to people who need it which is not necessarily reflected in their FICO scores or any of their credit scores. We use technology to drive these decisions,” said KN Kasibhatla, Chief Technology Officer at LendingPoint.

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