Kiva is celebrating the opening of new offices in Second Life on Saturday, Jan. 5th. Join in at 10:30 a.m. to 12:00 p.m. SLT, get a Kiva wristband – and don’t forget to pick up a Kiva certificate or two. You can turn “Lindens into Loans” with them.
Kiva is perhaps the most widely known micro lending site, and happily it is getting more and more mainstream attention (when its Oprah’d its “real”). Kiva is just one disruptive force within the current financial world.
If you are not familiar with Kiva, the organization acts as a “middleman” allowing you and me to make interest-free micro-loans - as little as $25 - to individual entrepreneurs in a developing economy. Loans are aggregated among several lenders to supply a borrower with the funds amount the entrepreneur is requesting for financing their business. When your loan is repaid to you, you may re-loan or withdraw your money. World wide micro lending has a 98% repayment rate.
Christmas night, (in my part of the world) the BBC’s Peter Day interviewed representatives from several micro finance institutions. I'm pretty sure it was the gentleman from Fair Finance (it may have been Grameen Bank - the radio broadcast is no longer available for me to verify and I was oh-so-drowsy), who said something profound by virtuality (and conventional finance) standards...
micro lending allows people who have essentially no identity to gain the benefits of loans through reputation.
Micro lenders typically make loans to individuals with no collateral – only by way of reputation. In some cases a close group surrounding the individual will jointly be accountable. Grameen Bank looks at the individual’s potential – by way of the “social collateral” of reputation. Kiva’s repayment philosophy rests on the indivdual’s desire to maintain his/her reputation, believing Kiva mirrors the village and that an individual will work very hard not to sour one’s reputation in either the village or online.
We’re already seeing companies using Google searches, MySpace, Bebo, LinkIn, Facebook and other “virtual reputation” devices to assess (or find) an employee candidate. If you’ve been in Second Life or other virtual worlds for even just a short time, the first thing you do is look at a person’s virtual profile – and maybe their groups – to get a sense of “who” you are talking to or standing next to (one wish for 2008 – LL strengths reputation systems in SL).
We’re sharing more and more of ourselves in virtual spaces like these – far more than we may share on our loan application, that’s for sure. Is it really such a stretch that reputation becomes at least as important as a credit score – or that eventually credit scorers find a way to “quantify” our social graph? Is it such a stretch as we “live” more in "virtual" places that who we are actually hangs on reputation and a bit less on “identity?”
Now, I don’t see conventional lenders dumping their business models any time soon, but disruption is the place to peak into the future. Go take a look - in Kiva’s new offices.
Hat tip to Fleep.
January 1, 2008