Scratch Raises $17 Million To Ease Loan Repayment Process with New App
Scratch Raises $17 Million To Ease Loan Repayment Process
Loan repayment is often a hectic undertaking for most people. However, the most of annoying aspect of this responsibility is the people at the lending end; they typically send a flurry of messages reminding you of your debt.
As a solution to the challenge mentioned above, Sameh Elamawy teamed up with a group of like-minded individuals sourced from Amazon and Pinterest to transform the loan servicing sector. This will be done using an app Scratch that was established by Sameh.
So far, Scratch has managed to raise a whopping $17 million from investors and venture funds. As mentioned above, Scratch intends to oust the current loan servicing model that is reliant on obsolete and analog methods. To put this in perspective, existent loan servicing platforms depend on call centers and huge volumes of paperwork to perform the task as easy as changing the due dates for loan repayments.
The Scratch platform will leverage APIs that obtain data form lending platforms and inform individual lenders of their repayment obligations through a mobile app interface. In addition, the app will also inform users of interest and borrowing conditions, enabling them to have a deeper understanding of their financial options.
As of now, Scratch is servicing student and personal loans. In the future, the platform will extend their services to cover mortgages and other variations of debts. It is worth noting that the app sends an email inviting prospective users, rather than the conventional approach where users resisters on a platform.
According to Elamawy, the idea of starting Scratch was incepted after a conversation with an Uber driver who was overwhelmed by keeping track of her loan repayments. Sameh believes that the current loan servicing model encourages loan servicers to penalize borrowers for failing to repay loans within the stipulated time. This is because lenders usually delegate the loan collection tasks to third-party companies.
Since Scratch is heavily dependent on technology, the costs that would have otherwise been incurred for manual record-keeping are redirected to creating a better experience for borrowers. Although this does not alleviate the due amount, it reduces the service fees for the lenders. Theoretically, this can result in the imposition of lower interest rates for loans.
The Scratch app is one of the many Silicon Valley projects that are aimed at transforming the lending sector. For instance, Prodigal and True Accord have a vision of introducing technology in debt collection, thereby making the process less harsh. On the other hand, SoFi wants to add a support and communal dimension to the student loan industry.
Elamawy is confident that Scratch can reduce the hostility and abrasiveness associated with loan repayment. In this regard, Sameh revealed that the platform is currently handling billions of dollars. He added that although the amount is negligible in comparison to $13 trillion debt, the company is satisfied by its current growth rate.
Notable corporate institutions that have invested in scratch include JP Morgan Chase, Founder Funs, the Center for Financial Services Innovation, Ribbit Capital and many more.