modernmicro
Re:How Zidisha Hides Its 20% Loss Rate From Lenders – And Why It Matters
on Friday April 25, 2014 @10:33AM (#7646698)
I noticed you just removed your Portfolio At Risk statistics completely (unless it was moved elsewhere)?
https://www.zidisha.org/index.php?p=43
The statistics page was also changed to only show lending statistics for loans disbursed in the last three months. As a result, new visitors will see the write off rate stated as 0%. These loans haven't had time to be written off, so that write off rate is always going to be 0%.
Meanwhile your all time write off rate is still 18.66%. That should be the statistic displayed to new visitors, not 0%.
Re:How Zidisha Hides Its 20% Loss Rate From Lenders – And Why It Matters
on Wednesday April 23, 2014 @10:49AM (#7634264)
I noticed that you tend to respond to perceived criticism by attacking your fellow microlenders, rather than addressing the issues raised.
The thing is, you have a lot of angry lenders who feel misled by your marketing. After using your site and reviewing your marketing, I think they have good reason to be upset. Zidisha has a track record of downplaying its loan loss rates. I'm not the only who feels this way: your lenders are very upset about it.
You mentioned you had a long response explaining why my article was inaccurate. But your response mostly just said that you say Zidisha is risky in your FAQ, terms of use and other internal pages.
Why not put your repayment/loan loss rates and mission statement on your frontpage?
Re:How Zidisha Hides Its 20% Loss Rate From Lenders – And Why It Matters
on Tuesday April 22, 2014 @05:00PM (#7630414)
"Our credit risk control mechanisms have improved dramatically since that time, such that I think it's reasonable to expect that the value of lending funds can be maintained over time without erosion for the loans that are being issued today."
To achieve that at the max interest rate you allow (~10% APR), you would need a 2.4% loan loss rate. That's an order of magnitude below where Zidisha is now. That would be an incredible achievement and I would gladly cover it as a huge story!
Is Zidisha on track to deliver a 2.4% loan loss rate?
Re:How Zidisha Hides Its 20% Loss Rate From Lenders – And Why It Matters
on Tuesday April 22, 2014 @04:52PM (#7630364)
The microlending websites you mentioned have much higher repayment rates, so that there's a much smaller amount of portfolio actually at risk:
* Kiva: 98.95% repayment [1]
* United Prosperity: 97.8% repayment [2]
* Vittana: 95%+ [3]
* Kiva Zip: 88.8% [4]
* Zidisha: 74.19% [5]
I noticed that Zidisha doesn't publicize its low repayment rate (and the correspondingly high loss rate) very broadly - for example, on your frontpage. If you did, your forums probably wouldn't be filled with comments like these:
"The long-posted 98% repayment rate left me with a bitter taste. I feel both deceived and stupid." - mewesten
"I think you will not care at all when zidisha folds and you will not care at all at all the lenders loosing all their money. You will pat yourself on the back at all the money given to borrowers and what good work you did giving away other peoples money. Is it legal what you are doing? These are funds provided by members of the public it is not your money." - Russell
"If the model is to be sustainable, lenders must surely be made to feel that their interests are taken into account. They may choose to act as if they are in fact not lenders at all but givers - but that is not your advertised model, and would soon run into the sand in any case." - Wiredfox
"Your vision for Zidisha as a marketplace like ebay was a surprise for me to read in the forum. There is no clear explanation of this on Zidisha’s website. The impression I have had from the website is that Zidisha is just like Kiva and the others, except for the comments and low interest. It never occurred to me that no one was reviewing the business loan applications. I assumed Zidisha was somehow doing this." - Evelyn
These are your own lenders talking.
I think that if you explored some of the ideas I mentioned (e.g. featuring the repayment rate and loan loss rate on the frontpage, and adding a mission statement to the frontpage as well), you would see less angry lenders like the above.
[1] http://www.kiva.org/about/stats
[2] http://www.unitedprosperity.org/us/risk_factors
Re:How Zidisha Hides Its 20% Loss Rate From Lenders – And Why It Matters
on Tuesday April 22, 2014 @02:00PM (#7629250)
I'm a long-time observer of microfinance who is an active participant in most of the lending/crowdfunding platforms out there, including yours. I'm also a hacker, and am excited about the way that tech is being used in microfinance and crowdfunding. I think this stuff could have a big impact on the developing world, which is why I started this blog last month. I'm slowly working my way through the topics listed here, some of which I hope will be of interest to HN readers:
http://modernmicrocredit.blogspot.com/2014/03/modern-microcr...
Zidisha just happened to be the first topic I started with. My next article is going to be about revenue models in crowdfunding. Some companies are using some dark design patterns in their revenue models, and I plan to cover that as well:
http://modernmicrocredit.blogspot.com/2014/04/revenue-models...
As I mention in the introduction to my article, I wasn't planning on writing a followup on Zidisha. But then you responded to my last article by dramatically lowering your interest rates. So I wrote a followup covering what that meant for lenders.
Like I said in the article, Zidisha shows a lot of promise, and I very much want the concept to succeed. But to do that, I think you need to start being more transparent about the problem you have with high loan loss rates. I would love to see a long response from you regarding the article. I'd be happy to publish your response in the comments of my article, or even in the article itself. If you have any corrections, I'd be glad to publish those as well.