Affirm, Kabbage, Tala – The Big Three of Online Lending

Bitnewstoday monitors everything that happens in the world of modern technology, and Fintech is an area where money and the most advanced technologies are combined.

In the modern world, the rapid growth of start-ups that become “unicorns” in just a few years is common. Many companies seem to be falling into a strong current and are receiving as much attention from investors, the press and customers from the start as they could ever have dreamed of in the traditional industry. But is it as easy as it sounds to start a FinTech business?

Speaking of successful startups, Bitnewstoday aims to capture the directions of these flows and understand why these companies are becoming ‘trendsetters’. This article provides an overview of three promising companies in the field of online lending.

To affirm


Affirm is a company that offers payday loans online and at point of sale. To receive an approval decision, a potential Affirm client doesn’t have to wait long – the company’s rating system processes their questionnaire, social media profiles, and other documents very quickly.

With a positive credit score, the money instantly ends up in the borrower’s pocket in the form of a virtual card, which can be used anywhere such a payment method is available.

The founder of Affirm is known for one of his previous projects: PayPal, a payment system that has conquered almost the entire world. It was created by Max LEVCHIN as well as other famous entrepreneurs, such as Peter Thiel and Elon Musk. After eBay bought PayPal for $ 1.5 billion, it became necessary to look for a new line of business. In 2012, Max came up with the idea of ​​starting a business that would fix the existing unfair and awkward system of credit ratings and stories.

“And Affirm was originally a math exercise to see if we can make a better credit score product,”

says Levchin in a meeting. This idea was timely, and the current boom in FinTech companies offering online lending services, their success and continued growth confirms it. The rating system developed by Affirm fulfills its functions: the automatic online service solves customer problems by providing loans quickly and easily at the point of sale.

The company is growing. It signs partnership agreements with other companies and subsequent rounds of funding increase its value. Yes, Affirm is a private company that still operates as a startup and receives funding from investors. The recent F tour grossed $ 300 million, and now the company is worth $ 1 billion.


It’s hard to say how badly the company slogan“Make Life Better with Honest Financial Products!” “ corresponds to current reality, as the subtle life improvement issues are not easy to measure and assess in quantitative terms. You can take a closer look at customer reviews. Indeed, many borrowers are satisfied with the service and praise the company. There are also negatives, which are mostly caused by service outages, but it is a fixable thing and quite natural for a complex intellectual system that operates in close contact with customers.

However, it’s hard not to pay attention to the repetitions customer complaints, which suffered a credit bureau downgrade after the Affirm loan was successfully closed. It appears that the close of account report, which is sent by the company to the office, is perceived by the latter as a negative action, as a refusal to provide a loan product to the borrower. I would like to hope that such criticisms are wrong, that they are unfair and that they have no reason. Because at the same time, we would like to believe Affirm makes life better.



Kabbage also offers online loans using an automated system. However, the customers of this company are not ordinary consumers, but owners of SMEs. When the founders of Kabbage decided to start a new project in 2009, there was a mismatch between personal consumer loans and the lines of credit allocated to small businesses in the credit system.

The mission of the new company was to fill the void, providing loans to small businesses and automating as much as possible the process of applying for future borrowers and the subsequent receipt of funds. Rob FROHWEIN, Catherine PETRALIA and Marc GORLIN were busy developing and improving the service until 2011, when Version 1.0 has been released. A funny business name is a familiar synonym for the word “money” in many languages.

Currently, Kabbage occupies a leading position in its field, and this is largely due to its focus on clients who have problems with a credit score. Often times when other lenders turn down a business owner with an unfavorable personal credit history, for Kabbage, true business metrics, such as trade volume and reserves, are much more important than rating numbers. .

The automatic service provided by Kabbage comprehensively assesses a potential customer using various parameters: tax payment data, transaction information, and analysis of social media activity. Such a complex system is unthinkable without modern technologies like big data and machine learning.

The decision to issue funds and their transfer is usually made without the participation of managers and operators. “99% of our companies have a 100% automated experience”, noted Catherine PETRALIA in a 2017 maintenance.

The interest rate and cost of a loan in Kabbage is very high, and that seems to be the flip side: on the one hand, there is the availability of borrowed funds for clients with credit histories. in trouble, and secondly, the speed of receiving money. The lender is obliged to insure his risks by lowering the borrower’s requirements (compared to other companies) and speeding up the process of granting loans (the higher the speed, the greater the probability of error. high).

Kabbage is a $ 2.3 billion startup.


The startup continues to grow steadily, receive funding and expand its influence. This is also indicated by the recent news regarding the partnership between Kabbage and the Alibaba Group. Their common program called Pay later will be open to sellers on the Chinese platform, where they can lend up to $ 150,000.



Tala is another great company that offers high tech and automatic loans. In many ways, this startup is similar to the ones described above:

  • the initial idea of ​​the company founder Shivani SIROYA starting his own business was that “The existing credit system works very badly”;
  • to assess creditworthiness, Tala uses its own scoring system, which examines a dataset on the potential borrower, using machine learning technology and big data;
  • the intellectual service operates in automatic mode: it investigates, takes a decision, issues loans.

However, serious differences exist. Tala is a mission oriented, not a for-profit company aimed at providing access to credit products to people who are turned down by current financial institutions. According to Shivani, only 31% of the world’s population has access to loans, and this situation can be corrected, which Tala does.

Since the startup is focused on people from emerging markets, the loan amount is quite small, averaging $ 50. Their potential borrower is any adult who owns a smartphone. To start communication with Tala, you need to download a mobile app, give it permission to access data, and wait for a verdict.

To verify and assess the borrower, the Tala service uses data from the smartphone and creates a kind of “digital broadcast” of the user, analyzing their behavior while using programs and applications.

Tala is a business founded by a woman entrepreneur, mission driven and focused on the poor market. Of course, this startup has proclaimed some ethical principles on information that is not used to assess the borrower: gender, race, gender identity, religion, place of birth, state of health, political opinions.

The startup is very attractive to investors, but it’s not a “unicorn” like the two described above, but the potential is pretty obvious. At present, the company is valued at $ 109.4 million.


To quote Tala’s founder is more apt as a conclusion, and that seems to explain the reason for the success of many other companies:

“We were the first company to offer unsecured loans via smartphone when we launched our app in Kenya in 2014. We weren’t sure exactly how this product would be received – we just had the problem we wanted to solve and our solution.” .

Image courtesy of Easyapns

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