A micro-loan banking app with virality built-in? I can see why VC's are interested.
Using your social network to evaluate credit worthiness is something I've never heard of before. Is this common in the developing world?
I wouldnt say common but there are several startups in mexico doing that, one is called kueski
Pretty common yes. Informal lending systems that are used in a lot of developing countries (most people don't have access to traditional financial services like banks and credit cards) are largely based on social networks and social capital - you are less likely to default on a loan if it's your friends who loaned you the money.
Can anyone summarize their model? Can they automatically withdrawal funds from the borrowers via mobile bill subscription or something? Is this like a low-interest payday loan? How does it work?