- London-based fintech startup Fintern has raised $11m in Series A funding.
- The company wants to make consumer loans cheaper by using customers’ open banking data.
- Fintern said around 15 million people in the UK lacked affordable credit options.
Fintern, a fintech that wants to make personal loans cheaper, has raised $11 million in new funding.
The London-based startup, which was founded in 2020, targets “near-preferred” customers who may have a thin credit history or certain adverse elements of their borrowing history, such as a small number of missed payments.
Usually, customers are assessed for loans based on a credit score. Fintern uses a mixture of
open banking
data and artificial intelligence to create what he says is an improved picture of a person’s creditworthiness.
“Consumer credit markets leave many people, between 10 and 15 million people in the UK, without access to affordable loans,” Fintern CEO Gerald Chappell told Insider.
“Bank and non-bank lenders are praised at the credit score level, but we want to better understand people now that the data is available to open more low-cost loans,” he added.
Chappell said credit scores are entrenched as the market standard for unsecured personal loans.
Open banking, a regulatory change that opened up the use of application programming interfaces to allow third-party developers to create applications and services in addition to financial services, made it easier for consumers to share their data banking with suppliers.
“When I moved from China to the UK 12 years ago to get a well-paying job, it was impossible to borrow because I was ‘credit invisible,'” added Michelle He, co-founder and director of Fintern’s operation. “Even people in the UK can be invisible to credit due to credit scoring inertia.”
Since launching its platform in early 2021, Fintern has worked with around 50,000 clients in the UK and provided personal loans ranging from £1,000 to £7,500 ($1,350 to $10,000) for a term. one to three years.
To date, the startup has raised $54 million in debt and equity. The latest $11m Series A was led by Hambro Perks of London and was largely equity financing, as well as mezzanine debt, which will double the company’s staff to around 40 by the end of the year.
“Banks will try to catch up in five years, but they’re spoiled and don’t think they need to work to attract customers,” Chappell said. “Their credit cost is next to nothing, and it would be a very time-consuming and expensive process to implement such a huge amount of change in legacy systems.”
Fintern hopes to build a £1billion loan portfolio in the UK over the next five years as he seeks to get people out of credit card debt or the alternative market.
Check out Fintern’s Series A deck below:
