Freedom Finance, one of the UK’s leading lending platforms, has today announced the launch of Fusion Score, the first open banking enabled score that creates a single metric that interprets a customer’s eligibility based on both credit and transactional data, a first for the lending industry.
The Fusion Score can unlock better rates or a smoother journey for those with established credit histories. For those with lower credit scores or thin credit files the inclusion of their transaction data, via open banking, can help identify and secure a reasonably priced product which ultimately improves their financial health. This is also the case for those that due to circumstances, such as a divorce, find it difficult to obtain credit as the current systems regularly excludes them.
The Competition and Markets Authority (CMA) published a report in 2016 on the UK’s retail banking market which found that older, larger banks do not have to compete hard enough for customers’ business, and smaller and newer lenders find it difficult to grow and access the market. They proposed open banking to solve this, a system where customers and SME businesses could share their current account information securely with other third party providers from January 2018.
Jake Ranson, Chief Customer Officer, Freedom Finance said: “We set out to leverage the huge opportunity that open banking provides, finding new ways to help consumers gain access to quality credit, while enabling fair and responsible lending. We see too many customers fall short of acceptance for credit products due largely to the absence of data as opposed to the presence of a reason to reject them. The Fusion Score has been designed to help address that and is what we envisaged the regulator was hoping to see from the industry.
“The Fusion Score changes the whole dynamic of applying for credit by bringing open banking technology to the top of a multi-product pre-qualification journey for the first time. As the name suggests, the score itself is a single metric which interprets a customer’s eligibility by harmonising credit data with insights extracted from their consented transaction data. The customer receives a personalised score and a transparent explanation of all the factors driving it; lenders receive an enriched application allowing them to make offers to segments which they previously could not access.”
Freedom Finance has partnered with London based Fintech AccountScore to develop the new product.
Emma Steeley, CEO, AccountScore says: “In another first for AccountScore, we have worked with Freedom Finance to unlock the power of open banking for customers who are still assessing their options before making an application. This initiative allows our service to benefit consumers at the very start of their search for credit, as well as supporting the growing number of lenders who are using our enriched transaction data to get an up-to-the-minute view of a potential customer’s finances.”
Luke Enock, CEO, Oakbrook Finance says: “On our journey to simplify and personalise borrowing, we were a very early adopter of open banking. Having the ability to access real-time financial data has already allowed us to make better lending decisions for a growing number of customers. We’re delighted to partner with Freedom Finance to provide better outcomes for even more customers.”
Jake Ranson added: “All consumers can benefit from the Fusion Score. Those with established credit histories may find the Fusion Score unlocks better rates or a smoother journey, while those with lower credit scores, thin credit files or whose credit history has been impacted by a life event such as divorce could find that their transaction data surfaces a reasonably priced offer which improves their financial health.”