The Affordable Credit Challenge, run by Nesta Challenges in partnership with HM Treasury, encourages fintechs to partner with community lenders to make credit more affordable and accessibleCredit Kudos is a finalist for two solutions – one in partnership with Police Credit Union Ltd to help those in the police and armed forces, and one in partnership with Salad Money to help public sector workers, including NHS employees Public sector workers use payday lenders more often than average, and are therefore in need of greater support to access more affordable credit.
Award-winning fintech, Credit Kudos, has been announced as a double finalist in Nesta Challenges’.
Affordable Credit Challenge, using open banking to help community lenders support even more borrowers, particularly those in the public sector.
Originally announced in the 2018 Budget by the then Chancellor, Philip Hammond, the Affordable Credit Challenge is run in partnership with HM Treasury. It is a £1.5m prize that encourages UK fintechs and community lenders to work together to ensure people are able to access alternatives to high-cost short-term credit.
At present, high-cost lenders have access to data and technology that community lenders often do not, making it difficult for them to compete. Through these partnerships, Credit Kudos hopes to level the playing field and, ultimately, support borrowers.
The first solution Credit Kudos is a finalist for is a reward loan, developed in partnership with Police Credit Union Ltd which supports those in the police, military and wider rotective services family. This product uses open banking to monitor a borrower’s behaviour and reduce the interest rate they pay as they develop healthy financial habits.
The second solution, in partnership with Salad Money, is an innovative way to offer affordable loans that are repaid using pay slip deductions. This is achieved by using open banking and artificial intelligence to improve credit decisioning and offer access to low cost credit for public sector workers, including NHS staff.
Finalists of the Affordable Credit Challenge will each be awarded £150,000 to develop their solutions further over the coming months. The winners of the Challenge will be selected in Spring 2020 and will receive at least an additional £200,000.
Freddy Kelly, CEO of Credit Kudos, said: “Credit unions and community lenders provide an invaluable service to often overlooked or harder to reach customers. Working with our challenge partners, we will deliver two exciting new propositions, creating a blueprint for adoption across the entire sector. To date, new technology and data have been out of reach to many of these firms making it harder to compete with larger, high-cost credit providers. We’re thrilled to have been awarded two finalist places and look forward to processing the first loan applications.”
Paul Norgrove, CEO of Police Credit Union Ltd, said: “We exist to provide affordable loans for our members and always want to treat them as individuals – not just a credit score. Our reward loan solution, created with Credit Kudos, will help us support even more members and reward them for healthy financial behaviours.
Using open banking derived scores, the solution will automatically adjust the interest a borrower pays during the life of a loan. This means borrowers from the police, military and wider protective services family can proactively and positively impact their own financial situation.”
Tim Rooney, CEO of Salad Money, said: “We’re concerned that too many NHS employees aren’t able to access reasonably priced credit due to lenders relying on outdated credit scoring. Through Credit Kudos, we want to change this and believe that by using open banking data we’ll be able to lend to even more people who previously might have been unfairly turned down for credit. We are delighted to be chosen as a finalist for this Challenge and we hope our solution will give even more NHS employees access to affordable credit, preventing them from getting caught in cycles of debt with high-cost lenders.”
Credit Kudos is a revolutionary new form of credit bureau that uses open banking to make credit fairer and more accessible for all. It provides lenders with increased financial data that goes beyond traditional credit scoring and offers a more comprehensive view of someone’s credit worthiness. This allows lenders to make more informed affordability
assessments and lend to people who have previously been rejected due to traditional, narrow credit scoring methods.