The Bitcoin-friendly payments company and app Square is in today’s crypto news, this time for outlining its plans to penetrate to new markets by issuing business loans and soon move to consumer lending. The data collecting and analysing algorithms are deciding the creditworthiness and letting borrowers arrange their loans in a few taps.
As WSJ reported, one Texas-based food truck owner accepted a loan offer within the Square app and went on to borrow $150,000 to open a gastropub. The borrower, as reported, already used Square devices in order to process the credit card payments for his business. It was Square’s algorithms that had been watching the transactions and monitoring the sales before offering the loan in a few minutes within the app. The food truck owner received the funds few days after the confirmation.
As Wilson said in his own words:
“It’s either one of those things that are too good to be true or it’s going to require a lot of time and effort where it’s not worth it for me.”
This case proves that fintech is becoming bigger every day. Now, the technology inside Square is definitely a rival to big conventional banks which are bogged down by the size, bureaucracy and technology lags.
With this, Square confirmed that it is moving into consumer lending and exploring ways to offer loans to its 7 million user base. As one past Medium post by Square reads:
“We can also utilize Square data and machine learning to help our sellers find the best Square products for their business. We have a data science team devoted to using domain knowledge and feature engineering to predict a seller’s likelihood to use any given suite of Square product offerings.”
Currently, Square is preparing to open a bank in the US state of Utah and with this, offer business loans and deposit accounts to both consumers and businesses.
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