This interview is part of our new Blockchain In Lending series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and lending.
In this interview we speak with Anzhelika Osmanova, CEO and Founder of Lendonomy, to understand how her company is using blockchain to transform the lending business, and what the future of the industry holds.
1. What's the story behind Lendonomy? Why and how did you begin?
AO: I started Lendonomy alone in 2018. The idea is nothing new, and I think many people, especially when young and broke, get themselves into situations when they have to borrow money from other people. The whole situation is embarrassing and leaves you wishing you would just be able to get money from some sort of pool and return it without having to talk to people. It was a classic, “I wish all people in the country just gave me a dollar each, but without me having to talk to them” dream. On the other hand, there was this rain of marketplace startups that started to take off, and I thought that I could turn my student dream into something worthy for other people.
I told my good friend and ex-boss (now – Lendonomy's advisor) about the idea and asked her to kill it. At the time, I was heading a department at another promising startup, Huddly, which just a year before had secured a partnership with Google. She liked the idea and introduced me to people at TheFactory fintech accelerator, and they asked me to stay and try building Lendonomy within the borders of the accelerator program. I didn't even know what the accelerator program was and how companies are to be built.
When the accelerator took me onboard, I only had a simple slide deck and a rough idea of what I wanted to do. The accelerator ended up investing. I was the only solo founder who got through the whole accelerator program and ended up with cash at hand to keep on building.
2. Please describe your use case and how Lendonomy uses blockchain:
AO: Lendonomy is a peer-to-peer crowdlending platform aimed specifically at young people, whose lending habits differ a lot from people with more stable economies. The combination of microfinance and peer-to-peer lending is rather rare. This is not surprising, given that small amounts generally ask for higher interest rates, while users of such services can't afford to pay them and therefore prefer analog alternatives despite their inconveniences. For example, borrowing from parents or friends is still a thing among many people, especially young ones, despite being to a large extent a hassle. At the end of the day, friends won't charge a 1000% interest rate, what is an average APR of a standard microfinance organization.
Our own research among students in 16 different countries showed that 6 people out of 10 feel extremely embarrassed to ask for money, and many others, on the other side, have concerns regarding lending because of the fear that friends will forget to pay back. At the same time, most students don't use microfinancing organizations. Lendonomy comes to offer a service similar to Venmo in its convenience, and at the same time – with the business model not focused on interest rates.
Blockchain for us comes not where most would expect. We do not want to build a crypto lending service since the possibility of immediate use of the borrowed money at conventional stores is a must for us. Stable coins are not quite there yet, and crypto as of now still mostly remains a lending collateral or an alternative way of investment. We want to utilize blockchain for smart contracts and for building a verifiable credit history for our users. Borrowing 10 dollars and not paying back to peers has an effect on Lendonomy's Trust Score, which then has an effect on a given individual's credit score with the person's bank. We want to reward responsible borrowers by giving them a chance to build a verifiable credit history and receive the internationally recognized credit score, and blockchain offers this possibility.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
AO: The service is yet to launch. We are aiming to launch the app by the end of this year. We want to comply with all existing regulations, and that takes time. We are developing the service in collaboration with students from 4 universities and are actively seeking feedback anywhere we go, so we hope that after the service officially launches, we will hear something great from our fans.
4. What other blockchain lending use cases are you excited about?
AO: ETHLend by Aave is a captivating service to watch in blockchain lending. I think there is still a lot to say in the field, and the guys at ETHLend do the classic crypto lending in a very articulated and easy-to-understand way. I admire the team behind the service also because of how strategically they approach the market. Securing two licenses in Estonia gives them credibility in the European market and makes people who have previously been reluctant to lending in crypto less skeptical. LoanXchain is another interesting service to watch. The company is headquartered in Italy, and has secured a range of strategic partnerships. It is interesting to see how young fintech companies, especially the ones in blockchain, partner up with banks and financial institutions. In my opinion, if done right, such collaborations can result in a range of innovative services that are both compliant and trustworthy on the one hand, and amazing and user-friendly – on the other.
5. Where will Lendonomy be in five years?
AO: In 5 years, I imagine Lendonomy to be a “no-brainer” service when it comes to borrowing micro amounts from other people. Up to date, there is no mobile service on the market that would let a person instantly borrow money from another human being. I mean, I can rent a stranger's apartment in 60 seconds, I can rent my neighbor's car using a mobile app, I can even rent someone else's dog (!) but I can't borrow or lend money at the convenience of my phone without having to spend at least half an hour on filling out forms, uploading my passport, ordering a credit check, waiting for approval and so on… I am not in any way saying the above-mentioned things should not be done. What I am saying is that they definitely could be done better than they are done today. And in 5 years, we want to be the ones who would crack this code.