A fair credit experience: Interview with Olle Ahnve, FAIRTILE

Today, in our interview session we have Olle Ahnve.

Olle is the Co-founder and CMO of FAIRTILE, a credit technology company delivering intelligence and automation solutions.

What is FAIRTILE and how it works?

FAIRTILE is a fast-growing credit technology start-up providing intelligence and automation solutions across the entire credit lifecycle

Credit is the engine of the world, but the current model suffers from inefficiencies and to bypass those we trust a paradigm shift is needed. There are 1.7 Bn adults who are financially excluded and underserved, of which 1 out of 3 come from digital native generations with new behaviours and needs.

At the same time the traditional lender business model is failing, with 60% lower revenue growth rates than before the 2008 economic crisis, inefficiencies in processes representing 25% of operating expenses and compliance costs continuing to grow 60% year on year.

The solution is to use the data created by borrowers in their daily lives, which our technology analyses using AI and human science. This allows borrowers who have had no possibility to get a credit approval to be more fairly evaluated, while also allowing the lenders to grow revenues, improve efficiency and sustain compliance.

Our solutions, which cover the entire credit life cycle, are delivered on a SaaS architecture and can be set up with a lender within 24 hours. Every solution is tailored to the customer’s needs in terms of intelligence and automation services, what input data should be connected and also how the output is designed.

As of today we have developed our B2B business line, but we are planning to launch a B2C offering, with three projects currently incubated with the support of an Italian University.

With operations in the United Kingdom and in Italy, and the imminent launch of the Asian activity, FAIRTILE is already serving more than 6 customers and projects GBP 13.0M service incomes in 2023, and we are now launching our first fundraising round.

How does FAIRTILE bring more trust and transparency along the credit process?

FAIRTILE connects borrowers with lenders at the borrower’s request and with GDPR in mind. This ensures the borrowers to be evaluated using their own data to their own benefit, while also allowing them to have full understanding of what data is used during the evaluation.

The insight this adds for the borrowers into the credit process is never before seen and adds a new level of transparency and trust between lenders and borrowers. It also enables lenders to deliver financial services to new groups of borrowers in ways they could never have previously done — such as scored consumer credit, newly designed services, services at better conditions, and also reduced frauds.

What are some of the most important opportunities you see now that PSD2 is in effect and what do you envision as the most important solutions?

PSD2 will drive greater transparency, security, innovation and market competition within the financial services industry. It enables bank customers to use third-party service providers to carry out various activities based on their financial data. This requires banks to provide access to customer account data and/or initiate payments to these providers.

As a result, individuals will benefit from access to new and innovative products – and experience improved service levels.

While PSD2 poses serious threats to current business models, it also creates opportunities for financial services to compete as technology innovators, wielding powerful analytical tools to extract valuable insights from their vast stores of proprietary data.

Being a credit technology company we are certain PSD2 and Open Banking will have a massive impact also on the credit sector.

As of today, lenders are depending on credit rating agencies to calculate the creditworthiness of new customers based on historical data such as payment history, and outstanding credit. Behavioral and predicting models haven’t evolved much since the 1950s when the current frameworks were first developed. The current methods use few factors and often produce inaccurate results if even one factor is unavailable.

A fundamental issue is that many current models and decision processes in both high income and developing markets rely heavily on few historical data inputs for the consumer. For many individuals globally, this “traditional data” input is simply unavailable or too weak to make a consistent decision, leaving it to the risk appetite of the credit provider.

To enrich this approach, Lenders may supplement traditional data with a personal assessment to get a holistic view of the customer, but this is a manual and cost-inefficient process. A more scalable approach is to utilize transaction data to analyse spending habits and get an impression of the overall financial health and ultimately get a more precise probability of default.

In a time where everyone is looking for data-driven business models, transaction data is the gold standard of behavioural data.

We have created algorithms combining transactional data, human science and artificial intelligence. We don't just make conclusions based on the interplay of a few historical financial statistics of the consumer. We take a deeper look at the person at their request, their behaviours, their interactions and determine a personal profile towards financial relationships across the entire credit lifecycle.

Which are in your opinion the factors influencing the development of fintech credit?

The global fintech ecosystem continued to mature at an accelerated pace over the course of 2019. With big developments ranging from the rise of open banking, increasing regulatory clarity and maturation of AI and blockchain, 2020 promises to be another big year for fintech.

Even if FinTech credit encompasses all credit activity facilitated by electronic platforms, whereby borrowers are matched directly with lenders, when referring to FinTech credit the most relevant conceptual link is to loan-based crowdfunding, peer-to-peer lending, or marketplace lending.

There are no doubts that these three forms of credit are those dominating the global FinTech scene, but credit is something more. FinTech’s are making waves in the finance services and banking industries, and open banking will be a key factor propelling them to the forefront. FAIRTILE trust incumbents can leverage open banking to partner with FinTech players to remain competitive in the rapidly evolving industry.

The sharing of data between lenders and borrowers is commonly acknowledged as one of the core ingredients of successful credit markets.

The potential use of non-traditional data in creditworthiness assessments and, hence, lending decisions and more comprehensive and deep data sharing are correlated with more inclusive, efficient and stable credit markets.

The key to development of a viable market will be openness by the credit world, by this we mean the ability of Lenders and borrowers to embrace the data sharing concept to provide more benefits to everyone.

FAIRTILE enables financial inclusion unlocking the power of data to improve trust across borrowers and lenders.

Looking forward, how do you see credit experience evolving within the banking and fintech industry?

When it comes to credit, customers are demanding more transparency, personalization, and convenience, but it seems like no one is fully satisfying their needs yet. While traditional financial services have advanced themselves in recent years, they lack the agility to reimagine their credit experience in a way to be competitive with new entrants.

Credit will need to be highly personalised and at the same time highly standardised to satisfy the needs of borrowers and lenders respectively.

In the ‘age of digitization’, a fair credit experience is not a ‘nice-to-have’— it’s simply an expectation of customers today— there is no room for long waits, complex processes or added fees.

FinTech can be characterized as the movement to bring transformative and disruptive innovation to financial services through the application of new and emerging technologies which address consumer needs through a new wave of intelligence and automation.

The advent of openness and alternative data will allow borrowers to tell lenders more about themselves, their needs and make them able to react to changes in life, changes in family structure, changes in work situation, long term investment or family projects, health situations and so on.

The banking and fintech industry will need to blend together, in order to be able to interpret these signals rapidly and generate a set of standard credit responses adequate to support the borrower along their life time journey. Like the good old local bank manager used to do at the time of our parents where they knew if Mr Johnson was about to have a baby. In today’s and tomorrow’s world we don’t have the time to know our bank manager, but we have the means to know our bank and our bank and lenders will need to react on how to know us … just differently from before.

The difference is that, the ability to interpret this will need to be done on vast numbers in order to satisfy the need for a faster response, a larger community and the business needs to generate economical value to the bank and lender.

Big data and artificial intelligence are driving almost every aspect of decision making related to business. Organization heads and other stakeholders now do not have to speculate because they can access data from different sources. This allows them to analyse and make decisions accordingly.

Every company has short, medium and long term goals. What can we expect to see in the future?

We are just at the beginning of our journey. We have a clear strategy with the focus on our B2B developments as key target for the medium term. Complete the set of services we are delivering to cover all the needs of lenders will require an important effort and important investments.

Like anticipated, we are working to launch our operations in Asia. We have recently participated in the 3rd Shanghai Pudong Development Bank’s Global Innovation Jam where we ended up in the top 10 innovative Fintech start-ups among more than 150 entries. An even bigger honour was that we were the only European company.

FAIRTILE are also developing a new B2C business line, with three projects that we are incubating, which will create a B2B and B2C ecosystem to deliver an end to end approach to credit for both borrowers and lenders:

Expecto – will be the first social network for credit, helping borrowers proactively build their creditworthiness to access or get better rates and credit connecting with lenders. Our platform will be empowering, inclusive, disruptive and human centric.

Dipseity – will make it easy to connect the data from the apps and services you already use and consume them within a transactional system to access products and services, obtain better conditions, get discounts and much more.

Debbie – people fall behind on bills sometimes, but we don't think that should affect how they're treated. Debbie will be our virtual assistant to provide borrowers with the best debt counseling service to reduce debt through debt management programs.

Thank you for your time, Olle, it has been a great pleasure.