Platforms such as Acorns, Stash, and Betterment boil down modern day investment into an easy to use service. These services do very well with millennials as financial literacy is not as prevalent as it once was. Taking inspiration from these approaches, we sought to modernize a sector of finance technology that has mostly gone undeveloped, loans.
What it does
Traditional lending institutions focus on FICO scores to determine if a prospective borrower is fit to repay their loans. Payday loans are a strain of loans that boast a ridiculously high APR, in exchange for a lower FICO score required. As a service we aim to use additional information such as a recommendation from an employer to provide loans for those who traditionally would not be able to take out a payday loan. As for customer acquisition on the lender side, lenders can deposit in capital and have it be aggregated across our platform and loaned to borrowers we have cleared.
How we built it
The application was made in Android Studio as we are trying to hit the highest amount of millennials with our service. Like most modern fintech applications, mobile is the best platform due to its accessibility and the demographic that most heavily uses it. We used Firebase to manage account login/registration as well as Loan data and interest rates. We developed all the UI of the application, both the lender end as well as the borrower's.
Challenges we ran into
The liquidity of assets is a huge problem for lenders as during their service, they have to wait for specific times to withdraw their investment. However we have sidestepped this issue entirely by limiting transfers on non-end of month weeks to only 40% of the current balance.
Accomplishments that we're proud of
We have completely finished our client to server to client interaction. Loans posted by lenders can be taken by borrowers and then show up in their respective applications. The UI is a little rough around the edges due to the nature of a hackathon, but with more polishing we're set for our next big step.
What we learned
The finance industry, more specifically the lending industry, in the United States is decades behind. Agile, innovative startups such as LendUp, Stash, and Prosper raise tens of millions of funding and run circles around traditional institutions. To the finance intensive side of this project, we had to do our homework on traditional practices and laws.
What's next for Locus
If we get a positive response from judges and mentors, we plan on refining our business model and platform more and applying for accelerator funding so we can take this to market.