Credit Kudos CEO: What coronavirus means for open banking

Since its launching in 2015, challenger credit referencing agency Credit Kudos has taken on some of the big hitters of the financial world, the likes of Experian or Equifax, in a bid to upend how consumers and businesses access finance. In recent years this has meant bringing open banking-supported credit scores to the masses. 

Despite the coronavirus disruption this has meant a fast-paced first half of 2020. In the early days of lockdown, Credit Kudos secured a £5m Series A funding round most of which was all “signed remotely,” despite having been in talks with investors since last November. 

In the past year, the challenger has added over 50 new lenders including ClearScore, CarFinance 247, and Mojo Mortgages, allowing customers to use their bank data to secure better offers across unsecured loans, car finance and mortgages. 

The fintech claims to be the first to use open banking to replace traditional, credit assessment processes, allowing lenders to provide credit to borrowers who would have previously been declined or overlooked, a process which is even more important now. 

AltFi caught up with Freddy Kelly, founder and CEO of Credit Kudos (over the phone) to discuss all things Credit Kudos and how open banking can thrive after Covid-19.

Coronavirus and credit 

Following the coronavirus pandemic “there’s going to be a longer-term greater demand for better credit decisioning,” Kelly told AltFi, “as a challenger in the credit referencing space we have the unique opportunity to integrate with some of the bigger companies that perhaps would take longer normally.” 

“And we’ve seen all sorts of shapes and sizes of businesses wanting to accelerate their adoption of open banking so that they can better understand risk in customers as they re-enter the market or ramp up to where they were at the start of the year.” 

But, despite the economic doom and gloom that has begun to rear its head, Kelly remains unphased. 

“The more uncertain fears about the customer and the risk profile, generally higher the cost of the credit,” which is, unfortunately, happening more and more as a result of coronavirus-related job losses and reductions in creditworthiness, however, Kelly thinks that fintech could save the day. 

Fintech to the rescue 

Kelly maintains that fintech and the alternative finance ecosystem will help many people pull themselves out of the coronavirus-related financial hole they may have found themselves in. 

“I think this crisis has created an opportunity window for alternative finance as a kind of umbrella to help bring products to market quickly and new models that will serve the need created by this period of uncertainty,” Kelly told AltFi. 

Kelly thinks that, while this crisis is vastly different to the last financial crisis in 2008, fintech has the chance to thrive in the same way it flourished all those years ago. 

 “Post-2008 alternative finance played a huge role because companies came to market really quickly with new products to serve a need that had been created by that opportunity.” 

“I think we’ll see the same type of innovation in companies creating new lending products using the data available to them,” Kelly went on. 

First in line 

The UK has long been at the forefront of open banking and some of the most innovative companies and solutions hail from the UK, however that doesn’t mean it’s perfect. 

“Learning from the mistakes of open banking will be really key to the success of open finance,” Kelly told AltFi. 

“The UK went first, so we found the problems first and a lot of other countries and implementations learnt from our mistakes and the challenges we faced.” 

“It’s important to take a step back and look at the way we are doing things and say, ‘another country has done a much better job at this’ and that’s how we can improve and learn from other implementations of open banking.” 

So, there you have it, Kelly predicts that coronavirus could see the wider implementation of open finance, but only if we iron out the creases of its predecessors.