Rakuten takes a stake in US P2P lender Upstart
Rakuten has taken a US$32.5 million stake in US online lender Upstart, which counts major venture capital firms including Google Ventures and KPBC (Kleiner Perkins Caulfield Byers) among its existing investors. The firm is a promising P2P startup, which has lent more than US$600 million in just four years of doing business.
Upstart's technology performs 50,000 projected risk calculations in seconds
Source: Shutterstock
Established in California in 2013, Upstart has grown rapidly into a popular online fast credit provider with over 50,000 customers. It has been attracting attention for a unique screening process that sets it apart from rival P2P lenders.
Upstart’s website advertises the fact that it does not rely on credit scores from the big three consumer credit agencies (Experian, Equifax, Trans Union), which are the staples for credit scoring in Europe and the US. Instead it relies on the FICO score, which is generated using predictive analysis and decision support software.
This next-generation form of credit score, provided by US company FICO, reflects a loan applicant’s overall financial means, spending pattern and ability to repay. It does this by taking into account such information as their college attendance record, the subject they majored in and their exam results, as well as more traditional metrics including their repayment history, credit balance and new credit.
Upstart’s technology can make more than 50,000 projected risk calculations in a few seconds, and set an interest rate commensurate with the calculated risk, with loan applicants graded AAA to E. While an AAA-rated customer would be charged an annual rate of 4.0-4.3% for a three-year loan, an E-rated customer would be charged 21.5-25.27%.
Upstart’s CFP Sanjay Datta was previously VP of Global Advertising Finance at Google, where he built Google’s US$80 billion advertising platform.
The company’s lending target for 2017 is US$1 billion. It is also aiming to expand by selling its technology to major banks and retailers.
(By ZUU)
Related Articles
- PayPal goes P2P
- P2P lending: Should I jump in?
- Bank of America is taking fintech seriously (especially instant mobile P2P payment)
