Introduction

Project Context

Financial inclusion is widely recognized as a vital component for fostering sustainable economic growth and enhancing the financial resilience of individuals and enterprises. The National Strategy for Financial Inclusion (NSFI) 2022–2028 defines it as ensuring that everyone, especially vulnerable sectors, has effective access to diverse, quality financial services. Data reveal stark disparities in account ownership: only 27% of those in the lower socioeconomic class (E) hold formal accounts versus 72% in the upper class (ABC1), and employed individuals (39%) are twice as likely to have accounts as the unemployed (19%) (Suficiencia, 2022). Digital transformation is also evident, with digital payments doubling to 20% of total retail transactions in 2020, driven by COVID-19 (Suficiencia, 2022).

Debt management is essential for financial stability, requiring responsible borrowing, structured repayment, and informed decision-making. Borrowers must assess necessity, affordability, and repayment capacity while lenders evaluate creditworthiness based on financial and economic factors. Regulatory frameworks, such as BSP Circular No. 730, ensure transparency by mandating the disclosure of loan terms, interest rates, and fees. Effective strategies include prioritizing high-interest debts, restructuring payments, adjusting spending, and seeking additional income sources. Ultimately, responsible debt management fosters financial well-being by promoting ethical lending, preventing financial distress, and ensuring borrowing aligns with productive activities (Padilla, 2021).

Unfair debt collection practices in consumer financing present a significant challenge to ethical debt recovery and financial management in the Philippines. Consumer financing, which is designed to meet personal, family, or household needs, often encounters abusive collection methods such as harassment, misrepresentation, privacy breaches, and extortion. To combat these unethical practices, a robust legal framework including the 1987 Constitution, the Consumer Act (RA 7394), the Truth in Lending Act (RA 3765), various lending regulations, SEC Memorandum Circulars, the Data Privacy Act (RA 10173), and BSP consumer protection guidelines which mandates fair and transparent debt recovery processes. These legal safeguards ensure that, during debt recovery, debtors receive fair treatment, accurate information, and the opportunity to file complaints or seek legal redress if their rights are violated (Lawyer Philippines, 2025).

LendRow, a promising initiative in peer-to-peer lending, seeks to revolutionize debt collection and enhance financial inclusion. By introducing a secure platform, LendRow improves transaction transparency and efficiency, empowering borrowers with better access to funds and offering lenders enhanced investment control. Through innovative debt collection methods and standardized processes, LendRow seeks to foster economic growth and stability in the financial ecosystem.

Purpose and Description

The LendRow capstone project aims to develop an efficient, secure, and user-friendly lending system that enables individuals to borrow and lend money seamlessly. It aims to facilitate peer-to-peer lending by connecting borrowers who need financial support with lenders looking to invest their funds.

Rationale, Timeliness, and Relevance: LendRow offers an accessible alternative to traditional banking by connecting borrowers with lenders. It assists people facing strict loan requirements while providing lenders with better returns and control. LendRow is timely due to economic uncertainty and growing digital trust, meeting the demand for easy-to-access loans and benefiting from fintech trends. The platform promotes financial inclusion, supports economic growth, offers flexible terms, leverages technology, and builds trust through transparent lending processes.

Possible Solutions and Improvements: To address the key issues in peer-to-peer lending, LendRow proposes several solutions. For limited access to financial resources, LendRow introduces digital lending platforms to integrate individuals into the formal financial system. To combat poor debt management due to insufficient financial literacy, LendRow implements standardized lending formats that incorporate credit history assessments, improving transaction flow between lenders and borrowers. Lastly, to resolve inefficient debt collection methods, LendRow adapts innovative debt collection methods to streamline the debt collection process.

Beneficiaries and Their Benefits: LendRow can be beneficial to both lenders and borrowers by providing an accessible, efficient, and user-friendly lending platform. Borrowers can gain easier access to financial services by overcoming barriers, such as strict loan requirements. But lenders get better returns and more control over their investments. The innovative debt collection methods will streamline the process, reducing risks and enhancing efficiency. Overall, LendRow aims to create a more inclusive and stable financial system, benefiting all parties involved.

Contribution to Knowledge: The LendRow capstone project significantly advances digital finance and peer-to-peer lending by addressing key challenges with innovative solutions. It introduces digital lending platforms to improve access to financial resources, bringing more individuals into the formal financial system. Standardized lending formats enhance financial literacy by clarifying communication between lenders and borrowers. Additionally, LendRow streamlines debt collection with efficient practices, promoting a more inclusive, efficient, and transparent financial ecosystem.

Possible Implications: The LendRow capstone project could significantly impact future research and practices in digital finance and peer-to-peer lending. It may inspire studies on how digital lending platforms affect financial inclusion, literacy, user experiences, regulations, and scalability. Emphasizing standardized lending processes and modernized debt collection methods, LendRow improves communication and efficiency for borrowers and lenders, potentially reshaping the financial landscape by promoting inclusion, leveraging technology, and enhancing transparency. Future research could explore these advancements' socio-economic outcomes, validating their global financial impact.

By integrating these five essential elements, the LendRow capstone project establishes a well-justified framework and ensures transparency in its goals and anticipated impacts. It effectively communicates the research's significance, offering readers a clear understanding of its purpose and direction. This approach provides a stable foundation for exploring peer-to-peer lending innovations within digital finance dynamics.

Problem Statement and Objective

General Problem

Inefficient debt collection methods among creditors.

Specific Problems

• Poor debt management among individuals with financial obligations.

• Limited access to financial resources for individuals with financial needs.

General Objective

Increase the success of debt collection by 50%.

Specific Objectives

• Decrease the incidence of unmanaged debts by 50% through a strict financial management policy.

• Increase access to financial resources by 50% for individuals with financial needs.

Capstone Project Gap Objectives

Peer-to-Peer Lending Platform: Develop a robust system to oversee and facilitate direct lending between individuals, ensuring secure and seamless transactions.

Access to Flexible Lending Terms: Allow borrowers to choose repayment plans that fit their financial situation, making loans more manageable and tailored to individual needs.

Credit History Assessment: Implement a fair and comprehensive evaluation of a borrower’s creditworthiness, considering various factors to provide a more accurate and inclusive credit assessment.

Standardized Lending Processes: Implement clear and uniform procedures for lending and borrowing, ensuring that everyone understands the terms and conditions, making the process transparent and straightforward.

Scope and Limitation of the Study

The LendRow capstone project focuses on two primary groups: borrowers and lenders within the peer-to-peer lending ecosystem. This study will specifically address the following areas:

• This study targets borrowers aged 10 to 100 in Davao City, Philippines, earning between ₱10,000.00 and ₱50,000.00 monthly.

• It aims to improve financial access through a digital platform with flexible lending terms and thorough credit assessments.

• For lenders in the same demographic, the project offers secure investment opportunities with detailed borrower insights. It includes standardized lending processes, innovative debt collection methods, and strategies for comprehensive credit assessments and efficient debt recovery practices.

While the capstone project aims to address specific challenges in peer-to-peer money lending, certain limitations should be acknowledged:

• External Factors. The study may be influenced by external factors such as regulatory changes, economic conditions, or technological advancements beyond the control of the researcher.

• Resource Constraints. The scope of the study may be constrained by the availability of resources, including time, budget, and technological infrastructure.

• Evolution of Technology. Rapid advancements in technology may result in unforeseen challenges or opportunities that were not accounted for during the initial stages of the study.

• User Adoption and Acceptance. Despite efforts to enhance financial access and implement robust lending processes, potential reluctance among users to adopt digital lending platforms due to cultural or generational preferences for traditional banking methods may hinder the project's reach.