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A look into the fintech sector for immigrants as well as tips for new entrepreneurs
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When you think of fintech, it's easy for your mind to quickly pivot to things like Square, Robinhood (for better or worse), and Credit Karma, but there are many players in the fintech industry working on a variety of projects to improve and reimagine established organizations.
One such company is called Stilt. Stilt, at its core, is a banking institution in the US. It differentiates itself by offering loans to the underserved - immigrants and other people who may be without things like social security numbers or great credit scores.
Considering the large number of immigrants that work in the tech world in the US, something like this makes sense by combining the two sectors.
I had the chance to speak with Rohit Mittal of Stilt to learn more about the service, as well as the inspiration behind the company and how it uses unique algorithms to determine creditworthiness.
You can find the full interview below.
Care to introduce yourself and your role with Stilt?
I’m Rohit Mittal, Co-Founder and CEO of Stilt Inc. Along with Priyank Singh, Stilt’s other Co-Founder, I guide the strategy and vision for the company.
In just a couple sentences, what is Stilt?
Stilt is a fintech company - specifically, it’s a borderless bank for immigrants, one of the most underserved populations, from a financial perspective, in the US. Because immigrants may not have Social Security Numbers or significant credit history, they are treated as second-class citizens by the U.S. financial system.
Stilt’s mission is to fix that, to provide the financially underserved a platform to confidently build a new life and put them on equal footing as U.S. citizens. We enable our customers to build a credit history and access the markets that are necessary for building a better life. For now, we do that through specialized personal loans but are working hard to provide even more options to our customers.
What inspired the creation of Stilt?
Stilt came about because both Priyank and I, despite being ‘model immigrants’ (highly-skilled graduate students with exemplary grades and jobs/internships with great tech companies like Microsoft), had very difficult experiences with the US financial systems. Even while enrolled at Columbia in New York City, I faced issues securing housing because of onerous standards applied by landlords - they tried to check credit scores that I didn’t have.
Because of that, I had to sleep on a Columbia alum's couch for weeks until I found an apartment, which only happened because I heard that a guy who’d faced the same challenges the prior year was looking for a roommate - he turned out to be my future Co-Founder Priyank. He offered me a room without a credit history, a huge deposit or income. Similarly, trying to get a student loan in the absence of existing credit scores proved to be exceedingly difficult.
We thought that if even we, people with world-class educations working towards advanced degrees, found the system hard to navigate, how could the millions of other immigrants with less access to resources expect to succeed? So, we created Stilt to try to bridge that gap.
What separates you from companies like SoFi and Earnest?
SoFi and Earnest are built for a U.S. citizen population that is on the opposite spectrum of Stilt’s target market in terms of credit history. These companies are refinancing student loans only for U.S. citizens with thick credit profiles. Their requirements include a high FICO score, an education loan from the U.S. government and long credit history.
On the other hand, Stilt is serving immigrants in need who do not have these thick credit profiles but are highly skilled, extremely financially responsible, and currently building a life in the US. None of them have loans from the US government - they are not even eligible for these loans. We help immigrants build a strong financial foundation from day 1 of their arrival in the U.S.
Is Stilt available everywhere or is it only available in certain locations?
We currently offer our services in sixteen states - Arizona, California, Florida, Georgia, Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, Utah, Virginia, Washington, and Wisconsin - and are actively working to expand our offerings to the whole country.
I've seen where you've mentioned you have an algorithm to help gauge if someone is trustworthy enough to receive a loan - how does that work?
Traditional credit scoring mechanisms rate you based on your credit history, payment history, new credit, credit mix, and credit utilization. You’ll notice that most of these factors represent a chicken-and-egg problem: you need credit to get credit. This is a big problem if you are a person new to the country trying to enter the financial system.
What we do at Stilt is to make use of “alternative data” to determine someone’s creditworthiness, factors that are largely ignored in the traditional system but which turn out to matter a lot, in a predictive sense. We use thousands of financial and non-financial data points per applicant including job title, university degrees, and previous employers, which are extremely accurate predictors of credit and financial behavior.
On top of that, immigrants to the US are, statistically, more financially responsible than many of their American counterparts, as they’ve often had to overcome a number of bureaucratic obstacles to be here in the first place. So, in that sense, we’re already drawing from a very creditworthy pool of customers.
Do a lot of people in the tech world use your service?
Yes! While it’s by no means exclusive to them, the profile of people in tech are often just like Priyank and I were - creditworthy in every sense, except for the one that traditional systems deemed important.
They’re often highly-skilled, highly-educated, and many are even highly-paid - but, because they’re immigrants, they’re sidelined. That’s what we’re working to change. Immigrants in tech or otherwise deserve an opportunity to build a strong financial life in the US.
Was helping immigrants part of your plan from the start, or did you expand the service later to help on that front?
Interesting question - I’d say that assessing the problem was our first plan. We were working for tech companies in Silicon Valley and working on side projects at the same time, one of which was to determine the viability of building a new type of credit score for international workers like us.
So I suppose technically speaking, we came to this world as a data issue, though the idea to actually provide financial services came shortly thereafter. We tried to sell this credit score to banks and other lenders but they were reluctant to lend to this population. So Priyank and I decided to lend the money ourselves. We started by lending our own savings using these models and started building a company from there.
Stilt was created during a Startup Weekend - what advice to do have for other entrepreneurs who may be looking to start a tech company?
The biggest advice is to just start. Stilt was built from a side project that Priyank and I did at Startup Weekend but that wasn’t the only one or the first one.
We had worked on other side projects trying to solve problems that we faced ourselves and eventually one of them turned into a startup and we got funding from Y Combinator. I have always found that solving your own problems using technology and building things one step at a time can lead to great outcomes.
Anything new or exciting coming to Stilt in 2020?
We can’t get into specifics on this question quite yet, unfortunately, but we are indeed working on a new product that fits into our vision perfectly, and which we believe will go a long way towards addressing the issues we’re looking to solve.
Thanks for taking the time to answer my questions, anything you'd like to close with?
I think the one thing I’d like to put into perspective is that, while Stilt represents an opportunity to grow a real business and serve a heretofore-marginalized demographic group (so there’s a ton of room for growth!), the benefits of something like Stilt go way beyond us and our customers.
The people we’re bringing into the financial system contribute billions and billions of dollars to the US economy, both in their work and their spending. By giving them access to better, fairer financial systems, an appreciably greater amount of that input will go to businesses in their communities, to putting their kids through school, and to buying homes, cars, and getting married - rather than to predatory lenders. We see it as a net benefit for everyone.
I'd like to thank Rohit for taking the time to answer some of my questions.
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