Two years ago Alexey Chalenko and his partners launched 7Seconds credit marketplace. The company arranges issue of loans by banks, based on its assessment of the borrowers’ financial solvency. It has reduced a borrower’s scoring time to 15 seconds by employing an AI. In the near future, blockchain technology will be used for scoring. At the moment, 7Seconds is preparing an ICO to attract $45 mio and join the global POS finance market.
7Seconds arranges loan facilities for borrowers from various Russian banks at the points of sale (online sales primarily). The entity owning 7Seconds credit marketplace is MFK 7SecondsPay which since 2016 is owned by Alexey Chalenko (according to Kontur.Focus service). 7Seconds does not issue loans but performs an assessment of a borrower (scoring) on a Big Data basis. How does it work? At the websites of online shops cooperating with 7Seconds, a client has to press an installment plan button and fill out a short (7 to 20 questions) form. All other data on a borrower is collected by 7Seconds.
The data on borrowers is regularly collected by the company from over 40 sources. It is purchased from credit bureaus, mobile communication providers, online stores, social networks, recruiting agencies, government services, brand loyalty programs, etc. Its staff includes some data scientists. To counter fraud, the company also performs an assessment of clients of its own. The borrowers are divided into 38 categories depending on their loan default. One of four borrowers is a fraudster. Later, when there is more data collected, 7Seconds will employ the so called cost-sensitive learning. It’s very hard to teach neural networks to identify potential frauds since they can not assess a cost of a mistake which is of prime importance to banks. So the task of a mistake cost assessment is accomplished through cost-sensitive learning.
Having collected the data, 7Seconds performs a client’s scoring and then submits a client’s loan application and the scoring results to banks. After that, banks reply. Every lender (bank) makes a loan offer (amount, interest rate, term). A client then can choose the best one. Due to the assessor’s swiftness, the overall deal takes 15 seconds to 3 minutes.
7Seconds has made agreements with large online stores (Samsung, Dyson, Babysecret, etc.), major banks (Alfa Bank, Raiffeisen Bank, Tinkoff, Russian Standard and so on) and microlenders. All in all the company has 10 financial partners and over 60 retailers (including shops, medical institutions and travel agents). Still, as of today, there are just two banks which use the scoring developed by 7Seconds.
How is blockchain technology employed at a credit marketplace? Once a client is granted a loan, he signs a loan agreement (on the 7Seconds platform) with a lender of his choice, and a 7Seconds smart contract which becomes part of a blockchain. A client is to sign loan agreements either personally or by an e-signature. A blockchain smart-contract does not have to be signed as it is put together by a software program. A client has access to the terms of the loan and repayment schedule. CRET tokens are reserved as remuneration for a loan repayment. If a loan is fully repaid, a number of tokens specified in a 7Seconds smart contract is transferred to the client’s e-wallet. In case a client fails to repay the loan, the tokens are transferred to the bank under the risks coverage program. The information on the completed transaction is stored in a blockchain. A good borrower receives CRET tokens and then is offered better terms on further loans. A bank can sell tokens or use then for settlements with 7Seconds platform in a format allowed by the laws.
7Seconds aims to become the leader in the market. To make a breakthrough, the company transfers information on its clients to blockhcian or distributed ledger. It also attracts finance through crowdfunding. Blockchain is employed for banks to trust 7Seconds’ scoring and for borrowers to see all interest and hidden charges via smart contracts. That would substantially reduce banks’ costs on assessing borrowers.
By Natalia Kuznetsova