How UK start-up The Money Platform is transforming credit for millennials
EXCLUSIVE: The Money Platform, a UK-based peer-to-peer (P2P) lending marketplace tackling the credit barriers for millennials, is rolling out its open banking offering.
In a bid to get a more accurate picture of its users with access to 12 months of transaction data, the lendtech wants to be able to issue more loans to what it deems to be a financially undeserved generation in the credit sector.
“We think millennials – the under 35s – are quite harshly treated by traditional credit bureaus, mainly because they’ve got a completely different data footprint to generations before them,” the lendtech’s CEO Joshua Graham tells FinTech Futures. “High street banks are missing a trick by ignoring this millennial cohort.”
Unlike their parents, Graham points out that most millenials rent right up into their late 30s without taking out a mortgage – meaning they are not registered at one address for five years or more, which is one of the checks done by long-established credit bureaus.
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Millenials also don’t tend to work in the same job for that long, and they don’t often like the idea of credit cards – both things used to measure credit by big bureaus. Graham believes that millenials are good credit risks, that they’re loyal rather than “small fry” and that they are “financially organised” even if they don’t get points for it under the current system.
Instead of leaving millenials lumped with an “electronic thin file” which fences them out of credit opportunities, The Money Platform has built an algorithm for the millennial cohort. It took two years to create before the Financial Conduct Authority (FCA) onboarded the lendtech to its Project Innovate Incubator, allowing it to get its licence within five months of applying.
“It’s the responsibility of the credit bureaus to change and not wait,” says Graham, who believes the industry “hasn’t even scratched the surface with open banking”.
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The loans funded through The Money Platform, which can be anything from £250 to £1,000, come from other individuals in the UK – not from banks. Money is lent and borrowed for between 0.7% and 0.8% interest per day, cutting out the banks in the middle so the process is quicker and more transparent.
In an effort to keep developing its product, The Money Platform team – all junior and seniors employees alike – get on the phones once a month for ‘customer telethons’ where they spot the pain points ripe for product innovation. “I want us to keep listening to customers,” says Graham.
Having closed off the decade with a £1.5 million fundraise, the lendtech says it’s now processing half a million a month through its P2P platform. It makes money by taking a share of the revenue sent back to the lender rather than making anything off the borrower, affirming that it can only commit to solid loans otherwise it won’t make any money on them.
With 2019 a being a big build year for The Money Platform, 2020 will be focused on scaling up – and it will also be “the year of open banking”, says Graham.