Nigeria’s Sterling Bank introduced a new social lending service, ‘Social Lender’ which lets banking customers borrow cash based on the quality of their social reputation.
This time, it’s Sterling Bank‘s turn to shine: back in June 2014, they launched an innovative social lending platform named ‘social lender‘ (but not so much originality in the naming here) which lets their banking customers borrow small amounts of cash based on their social reputation.
Basically, the scheme provides a platform for online fans as well as followers that are customers of Sterling Bank to obtain micro-credit loan via social media channels starting with Facebook and twitter.
What’s ‘Social Lender’?
Social Lender is a social lending solution using your social media platforms. Small cash requests are offered to members of Sterling Bank social media communities with a valid Sterling account.
Cash requests are guaranteed based on the user’s Social profile and reputation.
How does ‘Social Lender’ work?
It is a three-step process: you register, you apply and you get your money.
But before a cash request is granted, The Social Credit Officers will carry out an extensive Social Audit on the Applicant, including reviewing the social reputation of the applicant and the applicant’s Guarantor(s) (where applicable). The Social Credit Officer makes the final lending decision on every cash request. Some users may be asked to provide additional “Social Collateral” to qualify for a cash request
Social Reputation Score & Social Lending Officers
This innovative online lending service from Sterling Bank relies on two key elements:
- Social Reputation Score: this is a proprietary Algorithm and software to rank available social profile according to several predefined parameters. The algorithm pulls information from the social media platform about the user (based on access granted by the user) to generate a Social Reputation Score. Every user is given a Social Reputation Score in percentage.
- Social Lending Officer: This officer is responsible for making a final decision on whether a cash request is granted or not. Should the Credit Officer not be satisfied, he or she can call on the customer/user to submit additional details in form of additional social collateral.
Arguably, social collaterals could stand as a third essential element of the social lending process, in case your social reputation score is not good enough.
More info on the Social Reputation Score
The following information or actions will be requested from the user :
- Basic User Details User School and Work Details
- Telephone Number Verification
- Bank Account Details
- Additional information will be obtained from the user based on Information available on their social media profile i.e Facebook or Twitter (Social Platform Permission required)
I’d have quite a few questions on the proprietary algorithm behind the social reputation score, which is a critical piece of the Social Lender service.
We all know that stats on digital and social media communities and engagement are flaky at best. They can so easily be bought at a cheap price, hence being fake and worthless.
Reputation-based Social Lending vs. P2P Lending
Unarguably, the most well-known form of social lending is Peer-to-Peer lending or P2P lending. Most of the leading P2P lending firms, including pioneers like Zopa in the UK and Prosper in the US, have enjoyed a steady growth in the last 5-8 years. They successfully added to their product offering and some of them even partnered with a range of big and small financial institutions like Funding Circle and Santander in the UK (press release) or Lending Club and Union Bank in the US (press release).
Nigeria, the Most Social Banking Industry
For the last couple of years, GTBank has pushed the social media banking envelope and the Nigerian bank even managed to established itself at the forefront of social banking with its banking service on Facebook, and social customer care with their live google plus hangout sessions and their twitter presence.
But unarguably, providing social banking on Facebook via a (not-so mobile friendly) app doesn’t instantly make you an engaging and trusted bank. And it’s even worse: none of the financial institutions providing any kind of banking or payment services within Facebook (ICICI Bank, ASB Bank, La Caixa, FNB Bank to name a few) have experienced any kind of decent level of adoption among their customer base.
We noticed this disappointing (but expected) fact month after month as part of your Visible Banking Facebook Watch series. Celent supported our findings in their recent report.
It’s good to see Sterling Bank stepping up and challenging GTBank in the social media banking space. ‘Social Lender‘ constitutes a fresh approach to social banking and it demonstrates Sterling Bank’s commitment to innovate and better engage with their banking customers wherever they are.
Sterling Bank’s Head of Social Media
- “At Sterling Bank we realise that one of the basic functions of a bank is to provide loan access for its customers, but we have also observed that the inconvenience of the processes often dissuades potential customers from applying for loans.
- “With the emergence of social banking on our various online platforms, the need to issue loans online has become relevant and this is why Sterling Bank has taken the initiative to develop a service that would make it easy for those who are active online to access micro credit.”