Lime Loans: the global power of AI

Grupeer is proud to announce that we are welcoming the new loan originator Lime Loans from South Africa on our platform! Lime Loans was founded by the leading fintech company Lime Credit Group (LCG), which has established itself as the digital lending experts across different geographies.

Their story

Lime Credit Group was established in Russia in July 2015 by two bright professionals, who believed that they could change the way how anyone could borrow money. Founders had previous experience in financial and IT industries, so they had an idea of how the perfect financial product would look like. Their primary objective was to help customers achieve their goals, help in unexpected situations and realize their potential. The most important goal was to build the scoring model, which can be applied in different geographies. Another responsibility of the scoring model was to approve only those customers, who would be able to pay back. It is not in the interest of the company to exploit the clients and push them into the debt trap.

The key competitive advantage of the Lime Credit Group was the global outlook since day one. The management team knew that once the scoring model is built, they will go global, it will be just a matter of time. After all, we are living in digital times and it is a shame not to benefit from it. So, the products that Lime Credit Group offers are purely online. After establishing successful operations in Russia, the footprint has grown to Poland (Q4 2015), South Africa (Q3 2016) and the latest geographical expansion was to Mexico (Q3 2018). The South African division will be raising funds on the Grupeer platform.

The model

The scoring model is built using advanced algorithms and machine learning technology. The model, or credit robot, firstly performs static checks against data points and secondly the dynamic verification based on open data sources. Additionally, it continuously improves developing potential checkpoints and periodically re-analyzes them.

Additionally, Lime Credit Group manages the risks on six different operational stages including the risk of fraud, credit risk, collection risk, and others. The scoring model gives the probability of default and a final decision whether to grant a loan or not in seconds. In a positive response scenario, the money is on customers’ accounts within minutes.

Lime Credit Group has the whole culture of innovation- the inhouse IT and R&D teams are focusing on creating, scaling and improving the model and online platform. As online lending becomes more mainstream it is very important to maintain the functionality of the platform at the highest standard possible, as this is expected by consumers.

Besides that, in 2017 Lime Credit Group has founded the machine learning lab in a local university. This initiative reasserts their commitment to modern technology and gives the group even more credit to be the front-runners in fintech.

Of course, the scoring model is not the only key to success. Besides the proprietary model, Lime Credit Group has hired a team of professionals, who make the business run smoothly and meet the ambitious targets.

Lime in South Africa

In South Africa the consumers with the ability to repay lack access to online lending products. This is due to the historical high default rate in emerging markets. As a consequence, traditional lenders are reluctant to offer such products and that is why the online lending platforms with a scalable business model such as Lime Credit Group have a competitive advantage.

In South Africa to become a non-banking lender, the company needed to go through the scrupulous process of getting the license. The regulator allows only locally registered companies to operate and conducts the full audit of the potential lender, even the employees get interviewed! But once the license is obtained, the micro-financial lender gets full access to governmental databases which include the official income of the potential lender. This was a perfect fit for the LCG’s scoring model.

The South African entity- Lime Loans South Africa (LLSA) employs twelve people, all of whom have a background in the financial industry. They benefit from the parent company’s advanced technology and share a common mission- become the best while putting the needs of the customers first.

The only product that is offered in SA is a payday loan. To apply for a loan potential customer goes online to their website www.lime24.co.za. After filling the application, the decision is made almost instantly. To evaluate the target audience Lime Loans is using the “Living Standards Measure” (LSM). This measure shows the customer’s ability to repay and is based on different variables like ownership of the real estate, DVD player and even if the person has access to hot water! The measure varies between 1 and 10. The target consumers of Lime Loans are between 5-10 LSM and typical are 5-8 LSM.

The culture of short term borrowing in South Africa is quite different from other countries- where no one is shy to borrow and has a good repayment discipline. If the customer has an unexpected event or a loss of a job- he/she contacts the lender and agrees on the repayment schedule. So, in practice the collection agents not even needed.

LLSA in numbers

On average, the scoring model rejects around 60% of first-time applications and only 1% of repeat loan applications. So far there are 5500 returning customers. The common loan purpose is for consumption and the average loan is around R1800 (or Eur110).

The past experience of the Group and advanced technology with no doubt gives Lime Loans in South Africa a considerable competitive advantage. We are very excited to partner with this respectable Loan Originator and hope our clients will welcome it too. Another country is represented on Grupeer and we are proud to grow our global presence. Happy investing!

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