Israeli Lender Secures $5 Million Funding

By Henry Thomas on Wednesday 22 July 2015

Alternative Lending

Israel based lender - BLender - has announced a $5 million investment, led by US venture capitalist firm Blumberg Capital.

BLender has, until now, been focused on the Israeli household credit market which, it claims, is lacking in competition with 95% market share going to banks and credit card companies. This results in "high credit costs and low interest on savings." BLender uses what it claims to be unique technology to disrupt this sector and offer competitive loans. CEO Dr. Aviv says that BLender's technology is particularly effective in areas where credit worthiness information is hard to find:

"If you look at different territories with no effective credit bureaus, the access to credit is quite low and the pricing is quite high. A lot of that high cost in efficiency, which we correct for as a digital platform. But the bigger issue is that there’s no standard way credit data is reported, collected or ranked – so lenders are often assigning a high price and hoping for the best."

The company highlights four parts to its technology that allow it to better price credit risk:

  • Rating 2.0: "unique in its ability to perform automated borrower risk assessment checks based on big data, financial, statistical and social parameters". The software was "specially designed for territories in which there is no credit bureau and thus a lack of consumer credit information"
  • DirectMatch: BLender's portfolio builder "which spreads the lender's money over a large diversity of loans" and minimises risk for the investor
  • Safeguard Fund: an added layer of protection in case the borrower has difficulty repaying
  • Premium Track: an "auto-investment solution" designed for long term investors. The software offers "increased diversification and spread."

According to Geektime, this technology has enabled BLender to offer $10 million worth of loans since its inception in November 2014, at an average size of $3750-$5000.

Using the newly obtained funding, BLender is expanding into Latin America and - more surprisingly - Western Europe. The expansion into Europe appears slightly counter-intuitive, given the relatively developed level of credit assessment in the region. However, Dr. Aviv appears confident that BLender's utilisation of "social, financial, and demographic information" offers an effective and unique assessment of borrower's ability to repay and will allow BLender to offer a more appropriate acceptance rate and interest rate – enabling BLender to spread beyond Israel and disrupt credit markets on an international scale.

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