March 20, 2015
In recent years, debt has become an antagonizing problem ailing consumers all around the world. High interest rates are causing many to drain their bank accounts for purchases that shouldn’t normally break the bank. If that wasn’t enough, attaining a loan through traditional processes is also tedious, slow, and even annoying. Even when provided with an online portal, customers must still wait for their request to be processed during business hours by a real person, involving large amounts of paperwork being shipped back and forth. This also leads to higher interest rates, as banks must somehow make up for the cost of paying these employees and maintaining other legacy systems.
This is where Grouplend enters the picture. Based conveniently between Vancouver’s Financial District and the startup friendly town of Gastown, Grouplend is an on-demand banking & loan startup. It is the first Canadian marketplace lender of its kind, bringing new innovations to an age-old practice through current technologies. Grouplend’s fresh approach attempts to solve two major problems with traditional banking/lending: time and money. These are two of the most valuable assets consumers have in this era, and the company is doing a great job at making sure you keep more of both.
Grouplend significantly reduces the time it takes to request a loan by breaking it down into a few simple steps. After specifying the amount of the loan (currently limited to $1,000-$30,000) applicants simply fill in a few details about themselves, receive a quote for all of their approved amounts (yes, that's right–instantly view any rate variations based on differing loan amounts), and send a few verification documents by email. An easy 2-3 minute process, after which the funds will be directly deposited within 24 hours. Now that's a lot quicker than waiting in line at the bank, and a lot cheaper too.
Without the majority of the overhead involved in a typical lending scenario, Grouplend can afford to offer much lower interest rates, up to 14% lower. The average Canadian’s credit card interest rate is around 20%, according to Grouplend. Through the utilization of their data driven algorithms, Grouplend was able to quickly pair customers with private investors at interest rates ranging from 6.3-17.5 percent. Grouplend recently reach 30 million in loan applications in 3 months, allowing them to drop interest rates by up to 4%. How can they do that? Well, the algorithms used to calculate these rates and pair investors with customers are data driven, and the more data they have, the more efficient they become. This could mean even lower rates and better pairings in the future, benefitting everyone.
Grouplend wants to make traditional lending a thing of the past. CEO Kevin Sandhu compared the company’s presence to the replacement of physical travel agencies by their Internet counterparts. He commented, I kept finding myself asking the same question, ‘What would a modern bank look like if we started with a blank sheet of paper?’ The answer, of course, is nothing like what today’s banks actually look like. I saw a massive opportunity to use technology and data-driven systems to reinvent the whole thing–to completely alter what we think of as financial services in Canada.