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Kreditech Group becoming the “digital bank” for the 4 billion unscored people worldwide
Big data combined with traditional data predicts creditworthiness
HAMBURG, GER (December 2, 2014) – There is a vast, untapped world for loans to the 4 billion people world-wide without credit scores. Traditional technology, using credit bureau scores doesn’t apply to these un-banked people, many in evolving countries without traditional lending practices. Kreditech is now using its proprietary, trained algorithms combined with some traditional credit bureau data to determine future credit worthiness in this enormous potential market for lending.
A consumer-friendly lending technology based upon 15,000 data points that attracts more customers
While credit bureaus rely upon traditional tools with fixed pre-adjustments, the Kreditech Group uses its own trained algorithms, including alternative data that includes social media to fortify their big data based findings about potential borrowers – including a remarkable, automated, predictive model on whether a loan should be made in the first place, and, once made, if they will pay back that loan. The end result is a consumer-friendly, simple technology that attracts more customers while generating additional data, further improving the automated scoring algorithm.
Based upon 15,000 data points, Kreditech’s proprietary technology allows lenders to acquire, identify, score, pay out and upsell customers within seconds. The automated processes combine with self-learning algorithms to ensure very fast and convenient customer service while minimizing costs and human error.
The proof of Kreditech technology is lower default rates on loans
As proof the technology works, Kreditech recently performed a back-test on two million scored customers which showed that big data combined with traditional data produces default rates lower than the industry standard: An internal back-test looking at all issued loans between 2012 and 2014* found that the combination of big data and credit bureau data produces the highest profitability (ROI).
Credit bureau and big data combined provides the maximum result for each decision making process
Kreditech data showed that the old ways of scoring credit worthiness simply don’t work with 2/3rds of the world’s people. In fact, the data showed that using only credit bureau data produces a negative profitability. Solely using big data produces a four times higher positive result. Credit bureau and big data combined provides the maximum result for each decision making process. Deploying this technology results in minimal risk when acquiring, identifying, scoring and paying out customers within seconds.
Credit scoring for the rest of the world
Kreditech’s unique understanding of data is a key driver for the Group’s past success, as Sebastian Diemer, founder and CEO confirms: “In an opportunistic trial and error approach our data scientists continuously include new sources and clusters. This makes our scoring unrivaled with traditional credit bureau decisions: Historic data only covers a limited amount of people, while our approach also includes the 4 billion unscored worldwide. Also, as our back-test proves, the predictive power of credit bureau decisions is very low.”
The Kreditech Group uses big data and complex machine-learning algorithms to serve a simple mission: “Building a “digital bank” for the unscored worldwide.” The Kreditech Group is split into two parts: “Kredi” stands for the subsidiaries operating as financial service providers that issue credit to private individuals. The second part, “tech” is the Hamburg-based tech company – Kreditech Holding SSL GmbH (Kreditech Holding) – developing banking technology and providing supporting services. Based on 15,000 data points its proprietary technology allows it financial service providers to acquire, identify, score, pay out and upsell customers within seconds. Automated processes combined with self-learning algorithms ensure fast and convenient customer service while minimizing costs and space for human error.
The Kreditech Group’s subsidiaries operate in eight countries. Deploying the technology, they offer products from risk based loans and microloans developing to more complex financial services to consumers such as prepaid credit cards. Founded in 2012 by Sebastian Diemer (CEO) and Alexander Graubner-Müller (CTO) the Kreditech Group has a revenue run rate of 35m USD and a team of 180 passionate employees from 40 nations working on the algo-banking of the future.