From solutions using open banking to understand borrowers better and lend to them more effectively, to platforms making affordable credit as quick and easy to access as offerings from high cost credit providers, the six finalists are blazing a trail in how to make responsible credit accessible to those who need it, when and how they need it.
The finalists are:
Capital Credit Union in partnership with Nivo and Soar
Capital Credit Union is working in partnership with Soar and Nivo to build an end-to-end member journey that will encourage more people to join credit unions. This solution will bring credit unions to new audiences, particularly financially excluded and younger people providing them opportunity to save and gain access to affordable credit.
Their solution will harness the latest mobile-first digital financial technology in enabling a full end- to-end member journey, continuing our member focused ethos, through the perfect blend of efficiency, speed and human support to those who would otherwise struggle to get access to affordable credit.
Central Liverpool Credit Union (CLCU) in partnership with NestEgg
Community lenders are having to decline borrowers considered marginally too risky to be offered credit. CLCU’s experienced, long-established partnership will build Financial Health Indicators (FHIs) into a successful lending platform. FHIs are an effective, transparent way to get potential borrowers to make the financial changes they need to be accepted for a loan.
FHIs cover spending, borrowing and saving. The applicant-borrower and lender use a transparent, shared set of FHIs to enrich creditworthiness and transform credit decisioning. The CLCU app improves vulnerable borrowers’ well-being and could save borrowers £50m interest with 55 credit unions using the software by 2021.
Fair for You in partnership with EML & Lending Metrics
Described as a ‘school holiday buffer scheme’, this solution is a structured revolving facility that provides modest credit under £100 to ease pressure in lower income family households through school holidays, when there is a spike in the use of high cost short term credit and foodbanks. A flexible and supportive weekly payment option to purchase an additional freezer shop at the start of each school holidays.
Hoot Credit Union in partnership with Incuto
Payday lenders have a significant and damaging presence across the UK, with people in Greater Manchester taking the 2nd largest volume of payday loans in 2018. Payday lenders have focused on marketing and user journey, including speed of decision and payout of loans.
A consortium of Greater Manchester-based community-based credit unions (Credit Unions for Greater Manchester [CUfGM]) wants to challenge payday lenders, offering a simple, affordable, and ethical alternative to payday loans via a new web-based portal. They will make decisions immediately, based on Credit Bureau and Open Banking, with automated payouts for completed loans.
Police Credit Union in partnership with Credit Kudos
Police Credit Union wants to provide customers who would normally not be able to access credit with a new reward loan.
The reward loan will use Open Banking to monitor the borrower’s behaviour and dynamically reduce the interest rate they pay. This approach will allow more customers to access fair credit whilst reducing risk for community lenders and enabling lenders to process a higher total volume of applications. The team believes that reward loans will be an important, scalable innovation which measurably increase access to affordable credit. With backing from the Challenge, Police CU and Credit Kudos will bring this innovation to market.
Salad Money in partnership with Credit Kudos
Millions of public sector workers cannot access low-cost credit to ease financial shocks due to an impaired credit score.
Salad Money is an ethical community lender taking on our flawed credit industry and delivering an innovative model for credit decisioning based on open banking and AI technology.
Their mission is to eradicate financial exclusion by widening access to appropriate and affordable loans. They offer borrowers loans of £300 – £700 that are repaid directly by payslip deductions of less than £50 per month over 12 or 18 months at an APR of 34.9% comparable to rates offered by mainstream lenders.