ClearScore has selected Credit Kudos to develop its new open banking powered eligibility solution for products including mortgages, credit cards, and loans. The launch will make a significant difference to thousands of people that currently are either unable to access credit or loans, or are forced to use high cost options. Through the partnership with Credit Kudos, ClearScore will both open the market for underserved users and also present more personalised offers to all users by enriching the application with open banking data.
The new solutions therefore presents UK lenders and borrowers with a win-win scenario.
For lenders, it provides them with new decisioning models and product opportunities by allowing them to redefine their overall lending strategies and approaches. Using open banking data, lenders will have access to additional, more up-to-date information than was previously available to them such as real-time income and expenditure and also an indication of future liquidity. Importantly, it delivers more precise and refined risk and affordability measurements to lenders, thereby improving time savings and accuracy while also reducing operational costs.
In turn, borrowers searching for new credit — including the traditionally underserved — will be able to source new, bespoke product offers by securely sharing data from their bank account in support of the application. This sharing of financial information will increase the chances of them being approved for credit when they previously may have been turned down.
Andy Sleigh, COO of ClearScore, comments: “At ClearScore, our aim is to help everyone, no matter what their circumstances, achieve greater financial well-being. However it remains that a large proportion of the UK population are underserved by financial institutions and still held hostage by their circumstances. By partnering with Credit Kudos, we are aiming to change this.
“By providing lenders with more information via our open banking integration to improve their decisioning process and affordability assessments, we will open up the credit market to thousands of underserved users who have previously been rejected. Plus, our research has shown that using open banking to open up lending to just 5% of ClearScore’s underserved population would result in an additional £30 million in lending per month. This could grow significantly in the following months and years as these users begin to use further forms of credit.”
Freddy Kelly, Credit Kudos CEO and Co-founder comments: “Together, ClearScore and Credit Kudos will revolutionise how lenders are currently assessing prospective users — and particularly those who are currently overlooked or who are underserved borrowers. This is a significant development for the sector, and we’re excited about the potential that this new solution will deliver to both users and lenders.
“Harnessing the power of open banking data will provide lenders with the means to better understand individual borrowers through valuable insights and personal data that are not currently available in the traditional credit score assessment. In turn, lenders will be able to re-evaluate their portfolios to create more personalised product offerings. We believe that the use of open banking data is the start of an important and positive change in the lending sector.”