On the Kiva Zip team, we’re enjoying disrupting financial paradigms.
Most lenders look at financial data when assessing credit risk — the strength of a borrower’s credit score or their cashflows. We emphasize social data — the strength of a borrower’s character and their standing in their community.
Most lenders have centralized, inflexible algorithms to determine which loan applicants qualify, and which don’t. We empower our online community of over a million lenders to democratically decide which loans we make, based on their individual and subjective preferences and passions.
Most lenders charge higher interest rates to riskier borrowers. We take small business owners that every other lender in town says “no” to (because they view them as too risky), and we lend to them at 0% interest.
In everything we do, we are trying to reimagine a financial system that’s based not on profit maximization, but on human relationships and personal connections.
In this (epically long!!) blog post, I set out our philosophy on Human-Centered Risk Management, report on how our team has been performing from a risk management perspective, outline how we analyze that performance, and share some of the interesting insights we’ve generated over the last four years.