When determining whether a person or business is qualified for a loan, having access to the very latest and most accurate financial data is crucial. But for many decades, the traditional credit scoring industry has been associated with long, manual processes that have left room for human mistakes. That’s why the Paris-based fintech company Algoan is on a mission to reshape the credit scoring industry by building fairer and more transparent credit decisioning tools.
To build a more detailed, up-to-date and error-free credit decisioning platform, Algoan teamed up with Mastercard, explains Algoan’s CEO, Michael Diguet: “We knew that the credit industry was relying on outdated technologies, leading to problems such as limited access to credit or over-indebtedness. We wanted to build a fairer and more evidence-based credit scoring model that embraced the new possibilities of open banking,” he says.
Algoan teamed up with Mastercard to implement open banking solutions in Europe. Now, Algoan’s credit scoring platform is based on detailed, up-to-date and error-free financial data that allows for instant and efficient credit decisions. “Open banking data is rich and factual. It allows for credit decisions that are fair, ethical and responsible. A high-performing scoring algorithm means more inclusive and responsible credit. It approves those who can repay and avoids giving credit to those who risk over-indebtedness. Because open banking data is factual, it allows us to focus solely on the financial aspect, avoiding any ethical biases,” Michael Diguet explains and continues:
“Anyone with a bank account can share their data and get a score with open banking. This wasn’t the case before. People with limited data — such as young people or immigrants — couldn’t get a credit score because they simply didn’t have the required information.”