Traditional credit checks usually rely on outdated financial records and the same old tools that credit bureaus have been using for decades. This makes the process slow, costly, and not fully reliable, because the results don’t necessarily reflect a customer's current financial picture. Then there’s the fact that banks across the world reject the majority of loan applications they receive.
Data analytics provider Nordigen wanted to change this. And they’re doing that by offering credit scoring insight tools that help lenders make more accurate assessments – all thanks to access to financial data.
Credit scores built on transaction data
Nordigen’s solution analyses consumers’ bank account data to identify risk-critical patterns and spending behaviours. These insights then help lenders make more accurate credit decisions and approve more creditworthy applicants.
By basing credit decisions on real-time data, lenders can more accurately calculate the probability of someone defaulting on a loan, optimise the overall approval and default rates, and reduce operating costs.
Having a more holistic picture of a customer’s financial situation leads to fairer offer for consumers – and less risk for lenders.
Harnessing the power of open banking
To make their solution possible, Nordigen needed reliable bank connectivity to access the financial data. So they turned to Tink’s account aggregation. Tink provides the raw, real-time transaction data straight from consumers’ accounts – which Nordigen then analyses to recognise spending patterns and generate insights.
‘People are becoming increasingly invisible to traditional credit bureaus in Europe. Financial service providers are constantly testing alternative sources for credit risk data to better understand their customers’ creditworthiness. By partnering with Tink, we’re able to offer an end-to-end solution and enable more companies to leverage open banking data across Europe,’ says Nordigen CEO Rolands Mesters.
Nordigen is just one of the companies that’s using new open banking capabilities to change financial services for the better – and bring benefits to businesses and consumers alike.