Financial Innovations Abound

FinovateFall displays the industry’s best and brightest solutions.

September 21, 2011
KEYWORDS lenders , online , social
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FinovateFall 2011 kicked off in New York City Tuesday with presentations by 32 industry leaders.

Here are four highlights from the morning session.

Social lending

Launched in August, Weemba is an online financial community that “revolutionizes the way borrowers and professional lenders find each other and interact,” says CEO Annette Gallagher, by using a social network-like format.

Potential borrowers create a profile under a nickname and post a project to secure financing from a participating lender (institutions only, not individuals. In addition to the reason for and amount of the desired loan, borrower profiles may include their income, education level, and veteran status.

For business loans, profiles may include the number of employees, annual sales or revenue, and articles of incorporation.

Lenders search through borrowers’ projects and narrow them down by credit score, loan amount, location, type of loan, and other factors.

When a lender finds a desired project, it may ask the borrower for access to his/her real identity and more details about the project.

“All parties save time and money,” Gallagher says. “Borrowers don’t hear ‘no,’ and lenders don’t spend time on borrowers who don’t fit their needs.”

Borrowers don’t pay a fee to use Weemba, and lenders pay a fee only for access to the borrowers they want.

Diamonds in the rough

Consumer data contains a lot of noise, but also a lot of gems, says Mark Hookey, CEO of Demyst.Data, a Web-based modeling toolkit designed to help lenders serve young and underbanked (“thin file”) consumers without increasing risk.

The tool provides for better segmentation for consumers typically rejected due to a lack of data. It does so through:

  • Convenient access to rich consumer-level data (i.e., telecommunications, location, demographics, and social networks);
  • Proprietary statistical techniques that outperform logistic regression when working with “messy” data sources; and
  • Technology used to bridge the gap between lenders’ current processes and optimized product offers.

Demyst.Data uses alternative credit information to unearth people who were rejected for loans unnecessarily.

“We believe information transparency can help responsible customers access the right products at fair prices,” Hookey says. “It’s a huge market. We’ll help you find those gems.”

Social climbers

Kabbage provides working capital to online merchants, leveraging information from online marketplaces to assess risk and determine advance amounts, fees, and interest.

“We use data banks can’t see,” says Kabbage Chairman Marc Golin, “such as how long these merchants have been selling online and customer reviews. We use social data to underwrite risk. It’s not much different than an insurance company looking at kids’ grade point average to see what risk they are.”

Kabbage launched a “social climbing” feature which enables online merchants to associate their social activities with their Kabbage accounts. The company incorporates information from these social media sites to underwrite risk and enable online merchants to receive a benefit by actively engaging with audiences interested in their products and services.

“We look at likes, comments, and posts on their accounts,” Golin explains. “How much affinity do people have for the store? How does it respond to their concerns? We look at their Twitter followers, tweets, and retweets. High customer engagement indicates success.”

Artificial intelligence

When it comes to online sales and service, lifelike avatars might be better than humans.

That was the finding of the National Australian Bank, which introduced the avatar, “Nola,” to its customers—and found she had higher customer service ratings and double the sales of credit cards than her human colleagues.

Such avatars can help financial institutions lower call center costs, boost online sales, and gather business intelligence, says Dr. John Zakos, co-founder and chief information officer for MyCyberTwin, which develops the realistic yet “virtual agents.”

The company developed “Sara,” an emotionally expressive interactive agent that answers customer questions quickly and accurately.

“She’s reactive in answering questions, but she can be proactive in product selection,” Zakos says.

Part of Sara’s charm is her capability to be an intelligent search engine, he adds. And she can talk to thousands of customers at the same time.

“She provides a good user experience,” Zakos says. “She makes customers feel comfortable.”

Check back for more reports from FinovateFall.

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