Aire is a new fintech startup that aims to address the problems of credit scoring young adults, people who have recently moved country, and the self-employed. These groups often have trouble establishing an accurate financial picture because of lack of traditional data. Aire is using additional data and machine learning platforms to make credit scoring decisions based on new metrics.
As a greater percentage of the workforce globally becomes mobile and self-employed, credit scoring agencies may not accurately reflect the potential and creditworthiness of this group. The large migrant and immigrant population worldwide also has challenges with establishing credit while moving and in the new home. The London-based company has recently been authorized and regulated by the Financial Conduct Authority (FCA).
Aire’s system allows the consumer to enter data to be considered in the credit score. Information that can be validated is used to produce a score. The entire process is transparent and works with consumer approval, unlike traditional credit scoring models which allow a “black-box method” without transparency. The co-founders are scientists with experience in data analytics, machine learning, quantitative finance and predictive algorithms.
Another new fintech startup is Mexico-based Konfio, which uses alternative credit scoring data and algorithms to provide microfinance loans to those who are creditworthy but underrepresented in the current financial systems. Konfio is focusing on small businesses, a sector vital to the economy. The company has recently received $8 million in investment funding.
Konfio is lending small, unsecured loans for businesses, and also uses new data analysis to quantify risk. They look at business cash flow and willingness to repay, a metric that is analyzed by looking at the online application, social data, e-commerce platforms, and other nontraditional data. By quantifying willingness to repay as a new metric, the company is able to make low interest rate, unsecured loans to very small businesses.
New metrics and new methods of quantifying and analyzing financial data is allowing new methods of credit scoring and small business loans for those who have traditionally been excluded.
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