New Product: Affirm, A New Credit Model for Millenials

I just came across this company, Affirm, which hopes to be a banking alternative for millenials.  Details below:

  • Focused on providing credit to millenials as an alternative to credit cards (from Fortune):

As people graduate from college, they may have to put a deposit down on an apartment. They’ll need a car or a real bed. These are all credit decisions. People ages 18 to 34 are predisposed to hate banks. They want financing, but hate paying interest—hate the idea of being stuck in debt. But they’re willing to pay a fee upfront to split a payment over several months. We can underwrite people that the system sees as terrible risks with better clarity.

  • Here is how it would work in practice (from Fast Company):

To do so, Levchin plans to harness big data and smart design to create innovative financial services. The startup’s first product is called Buy With Affirm, which provides short-term loans to consumers at the very moment when they purchase something online. For example, if you order a $1,000 electric skateboard from Boosted, which is one of the merchants that has signed on with Affirm, you’ll get the option to split the total into three fixed installments as low as $338 over three months. (Buyers can also split their payments across six or 12 months.)

  • Uses social data as an alternative to traditional credit scoring systems to make loans (from

Those systems “can scan for social information across social media or dip into proprietary marketing databases or combine that with credit histories. In total, the Affirm team has identified more than 70,000 personal qualities that it thinks could predict a user’s likelihood of paying back a loan. If old fashioned credit scores provide a fixed, black and white portrait of the borrower, Affirm claims to capture that borrower in full, moving Technicolor,” the story said.

What do your students think?  Does their product appeal to them?  Why or why not?


Check out the NGPF Lesson on Payment Types