Change Connections - Idea: Vouching System

ID for All

Many countries lack a widespread identification system and millions of people don’t have an official way to prove their identity. This leads to many challenges for people to get loans, be able to vote or use available public services. But many people do have a reputation within their communities — there are few ways to use that as validation. At the same time, security is often an issue, and handing over your identity can lead to privacy concerns.

The Big Question

What could offer people safe identification or help them build trusted reputations?

Idea

Vouching System

by Jerri Chou

People could get startup money or loans from banks/MFIs (microfinance institutions) based on recommendations from other people. A (local) social network like a LinkedIn could be created that allows for people’s trustworthiness to be vouched for by others. Individuals would vouch for people they trust in the community, which would also strenghten their relationships and help them to build a reputation.

You could have an address book with “evidence” of your trustworthiness via vouches by leaders in your community, employers, etc. For example, if you’ve paid remittances for the past 3 years without fail, your mother, employer and friends could all vouch for you to get a loan for your hospital bill. If you default, they could be held responsible to help foot the bill.

Additionally, a rating system that can be transferred from MFI to MFI could be used. Many MFIs give out loans based on “social collateral” but if/when a person leaves that community, they cannot take that “credit” with them. One idea would be to have a larger system that would allow relevant people to rate the “creditworthiness” of an individual. Think Amazon-style crowdsourced rating.

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3 Comments

Michael Karnjanaprakorn

Really interesting idea. This could be a new type of “credit score”

So, if someone had a high score and vouched for you, that would transfer to you as well.
Meena Kadri

“If you default, they could be held responsible to help foot the bill.” – great suggestion to avoid it imploding into a popularity contest.
Kirstin Butler

I think this could be a really powerful idea! Makes me think of a pilot project from economist Sendhil Mullainathan that’s testing out the idea of reputational credit for small-to-medium-sized enterprises: http://bit.ly/bTs7lX

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