Loan rejection is a highly unpleasant experience for many borrowers. Ninja Lender introduces a solution that allows rejected applications to be redirected to well-matched loan providers and thus gives some customers a chance to get financed.
Research shows that less than 20% of loan applications in the world get approved. That means over a billion individuals and enterprises stay unfinanced every year and thus have no resources for life improvement or business development. In many cases, this leads to financial exclusion, and the pandemic has heightened this phenomenon, affecting many borrowers worldwide.
According to the Association of Financial Companies in Poland, due to the statutory reduction in loan costs, financial institutions in Poland were rejecting loan applications, although most of the borrowers had creditworthiness. Even though the restrictions have been lifted, there is still much to do to get back to normal.
The problem of rejected loans also applies to the SME sector. According to the study made by the Polish National Debt Register and called “Payments and financing of enterprises during the pandemic”, every fourth small company that applied for a loan got rejected.
The reasons for the refusal of financing may be different. They are largely a consequence of the level of risk the bank or lending company accepts, which may result from the quality of its lending portfolio. The application first gets verified by the financial institution’s algorithm that checks the customer’s creditworthiness and assesses his lending history. The customer is also verified by the requirements of anti-money laundering and fraud prevention procedures. Loan applications can be rejected due to excessively prudent policy, and some bank customers are considered uncertain or suspicious. In this way, the bank or lending company resigns from financing them, even though they could receive a positive lending decision (the so-called false positive).
These situations are the focus of Ninja Lender, a fintech startup operating in Poland, which received funding from the Poland Prize program as part of the support from the Polish Agency for Enterprise Development. The essence of the platform is to match rejected applications with other financial institutions on the market.
The company is negotiating and signing agreements with banks and lending companies willing to support customers who received a negative decision and are interested in a new channel of getting leads. An additional service is involving 3rd parties for consultancy in the restructuring or consolidation of customers’ debts if, thanks to this, they will be able to regain their creditworthiness.
No one in the Polish financial market really cares about rejected borrowers and has offered so far such a comprehensive approach to solve the problem.
The business model of Ninja Lender as a financial intermediary is based on transaction fees because the company connects the parties and everyone benefits from it – the entity offering the rejected loan application; the institution purchasing it and expressing interest to provide financing to the customer; the borrower who receives the desired financing without wasting time and avoiding the stress of looking for it.
Thus, the solution offered by Ninja Lender counteracts the phenomenon of wasting loan applications. And research shows that more than 75% of borrowers would like to receive an alternative offer after their original application got rejected, and fewer would be willing to send the application to another financial institution. According to Mariusz Hildebrand, Business Executive at Ninja Lender, at least 20% of initially rejected loan applications can be saved in this way.
The innovation on the financial market implemented by Ninja Lender is based on world-class algorithms that are constantly being improved. The platform also optimizes the customer qualification necessary to get financing from defined and selected financial institutions, which will shorten the total time of loan verification. That is why this is also a personalized approach. It ensures higher customer satisfaction, broadens the availability of financial services, and can contribute to a positive image of the financial sector.