Credit Kudos, one year since LendIt’s PitchIt…

In October last year I pitched our vision to transform the credit bureau to an audience of investors and lenders for LendIt’s PitchIt competition. Nearly a year on, and with consumer debt levels spiralling out of control, the case for major change is more prevalent than ever.
Since stepping off the stage we’ve been working tirelessly to bring that vision to reality, securing investment from one of Europe’s top FinTech VCs and going live with several major lenders.

During my pitch I spoke of the increasing regulatory burden lenders must bear, a requirement that has now crystallised with the FCA’s latest occasional paper: Assessing Creditworthiness in Consumer Credit. We’re already seeing early movers benefit from reduced regulatory overheads, not to mention increasing their accuracy and acquisition rate.
That said, we’ve clearly got a long way to go. The industry suffers from inertia, be it legacy software, outdated processes or just “sleeping at the wheel”, failing to recognise the cost of doing nothing.

So, what’s the winning strategy? Are we seeing a Barnes & Noble to Amazon style shift in lending practice and, if so, who is the Jeff Bezos of our market? Well, clearly cannibalising business for regulatory reasons isn’t desirable. That said, we’ve seen great results from lenders taking a ‘hybrid’ approach, that is, augmenting old with new and giving customers choice. Ultimately, lending is all about trust, but there’s no reason to take a ‘one size fits all approach’.

A great example of this kind of change can be seen in the car insurance industry: I still remember getting my first car at the age of 17, not because it was a good car (it wasn’t) but because of the heart attack I had when I tried to insure it. I was the highest risk imaginable: a young male with no experience behind the wheel.

Today, new drivers can fit a little black box to their car that tracks their driving and allows them to demonstrate good behaviour in order to get a fair premium. The number of these Telematics insurance policies in the UK is growing at 65% YoY according to figures from The British Insurance Brokers’ Association (BIBA).

Just like Telematics measures behaviour on the road, Credit Kudos uses financial behaviour to measure creditworthiness. We give borrowers a fair score based on their ability to manage money and retain financial relationships, and we do it in a matter of seconds using financial information sourced directly from the banks.

As we have developed our Financial Behaviour Score (FBS), we’ve also worked hard to lower the barriers to entry for lenders wishing to adopt the technology. Most recently we’ve teamed up with lending software vendor, Zoot. Integrating with Zoot’s powerful cloud platform means deploying our tools can be as easy as dragging and dropping through the Zoot interface.

This year at PitchIt, we’re excited to see more start-ups looking to address major pitfalls in the lending industry.

The competition which takes place in London 9-10th October, is a great opportunity for start-ups to accelerate their business by getting in front of VCs as well as major banks and businesses. We hope to see lending, borrowing and credit-worthiness take centre stage this year as our industry wakes up to the huge opportunities technology can expose.

Freddy Kelly, Chief Executive Officer, Credit Kudos