LFP140 – The Fourth Retail Credit Bureau Is a Fintech – Freddy Kelly CEO Credit Kudos

The Retail Credit Bureau market has been in place for decades but disruption is coming to the market in the shape of Credit Kudos who help people make faster more accurate credit decisions. They have proved that this new source of data enables better credit decisions.
Formed in 2015 in anticipation of  ‘open data”  (a superior term in this context to Open Banking) they got by with screen scraping but now have a commanding lead with this new technology. Contrary to my inbox there aren’t a million firms doing new credit bureau services – only Credit Kudos.
In this episode we look at how open data and Fintech are changing the assessment of retail credit decisions.
Topics discussed include:
scepticism about “doing credit better”
working in San Francisco
culinary school
life in San Francisco, the good side but also the gap between those doing well and those doing badly
Freddy’s reasons for moving on
the benefits of having started your tech career on the west coast
the Silicon Valley Internship program
the value of being in computing in the data-olihic age
how perceptions of being in computing have changed over the decades
all businesses are data-centric – example of MotoGP
what is credit? what is credit scoring?
the areas of consumer finance that Credit Kudos covers
the UK market is very similar to the US consumer finance market – three large players who use the FICO model which was originated in 1953 (!) by Fair Isaac and Company
this combines credit histories etc to give a single score
the difference between the US which uses social security numbers yet we do not use the equivalent – our National Insurance numbers
FICO is a blunt instrument
most lenders don’t just use the overall score but take the underlying data and run their own (often not that sophisticated) algorithms on it
Credit Kudos use open data via open banking which is qualitatively different than the existing agencies (who use generally shared data – a different dataset)
“it is the quality of the data that matters not the quality of the magic computer that processes all the data”
how clients chose between bureaus – many parameters not just performance
“the harsh reality is that Open Banking was launched at beginning of 2018 but the data wasn’t ready until mid-year” plus the impact of poor tabloid publicity – if you ask people if they want to share their banking data they say no
Credit Kudos have found in last 6-12 months that people are willing to share their data to make better lending decisions
how banks attitudes have changed dramatically
clickbait, hatebait, hypebait
“the reality is that if its successful then no one will have heard of Open Banking – its just a means to an end.”
its unseen nature cf plumbing
the problem of no benchmark and it being hard to compare two apples in the credit scoring performance world
two key parameters how many people are you making the right decision for – ie success
but also coverage – what % of people can you rate

this latter percentage is far higher with open banking data and eg PSD2 European portability means that changing country won’t lose you your credit record; or gig economy etc – increasing numbers of people are not getting a regular salary that is a traditional pillar of credit assessment
shoutouts for those who would benefit from checking out Credit Kudos
And much much more
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