A tech company whose founder was just named to the Bureau of Consumer Financial Protection’s Consumer Advisory Board has raised $17 million in venture capital funding to help it “recast the loan servicing business as a friendly, easy-to-use app.”
The company, called Scratch, currently services student loans and personal loans, but has its sights on expanding into other types of loans, including mortgages. The company was founded by Sameh Elamawy, who was named to the BCFP’s CAB last week and who used to be a product manager at Pinterest. Based on a conversation he had with an Uber driver who was having a hard time keeping track of her debt payments, Scratch was born.
Scratch is aiming to disrupt an industry that has relied on form letters and call centers to induce borrowers to make payments, and relies on too much paperwork for changing even the simplest of terms or arrangements. Scratch is following in the steps of other tech companies that have set their sights on the collections market, such as TrueAccord and Prodigal. TrueAccord and Prodigal are more focused on the collections industry where it appears that Scratch is more focused on loan servicing, for now.
By providing a more empathetic approach and removing incentives that allow servicers to make extra money when individuals fall behind on their payments, the intention is to make lending and collections a less hostile experience.