Jun 2021 | Credit Decisions | Decisioning
And serving the millions struggling financially, to access affordable credit quickly.

In its 2017 Financial Lives Survey to understand the extent of financial capability and vulnerability in the UK, the FCA revealed that 50 percent of UK adults (25.6 million) displayed one or more characteristics that signalled their potential vulnerability. This meant that they were at increased risk of harm, or would suffer disproportionately if harm occurred.

Fast forward to 2020 and the covid-19 pandemic (and subsequent economic crisis) has accelerated an already over-exposed society, plunging millions more into debt (and high risk applicant status). In October 2020, the FCA updated its figures highlighting that 53 percent of adults are now displaying a characteristic of vulnerability. It also revealed that going into the pandemic, one in eight Britons had no savings at all and 8.3 million people were already over-indebted.

For many of these individuals, access to mainstream, affordable finance is no longer an option. Classed as high risk applicants, more traditional loans are either not available to them or are not suited to their immediate needs. However, their need for credit is even more urgent and they are actively seeking out funds to support them in the short term.

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Credit Unions and other community-based banks have been playing a valuable role in this space for years, offering an alternative to high cost short term credit and giving people classed as high risk the opportunity to access fair and more affordable credit. This market is now gaining even more attention and regulators are keen to see them grow. However, one of the biggest challenges faced by this market is a lack of speed and insight. Processes are slow and cumbersome, with journeys typically performed manually, taking up to a week to review and complete. Add to this a more complex and volatile environment, where the assessment of affordability is even more challenging than it was and the need for pace in a digitally accelerated environment is vital. This is continuing to hinder their ability to support people and, therefore, impacting their growth.

Fintech start-up Soar, which was founded on the basis that everyone deserves access to fair and affordable credit, recognised a need for more appropriate tools that would help Credit Unions develop and grow. The Soar team realised that there was an opportunity to make a real impact among those struggling to access fair and affordable credit and so began its journey to create a modern solution that would empower this market.

By partnering with Experian, Soar developed a hosted lending platform that could give ethical, community-based banks and lenders a streamlined, cost-effective, digitised and more efficient means of making credit decisions. This type of technology would have required high levels of investment, putting it beyond the economic reach of most community lenders. However, with Soar acting as the host, it can all be accessed without the burden of investment to build or fund.

Recognised as a rising star in the fintech world, Soar was keen to partner with the right data provider to help bring its ambition to life. Soar chose Experian for its unrivalled breadth and quality of data and ability to orchestrate the entire decision journey from start to end.

And with Experian’s continued investment in data, analytics and technologies alongside its cloud hosted Originations solution, Soar could give Credit Unions an always advancing approach to decisions enabling them to maximise opportunities now, but be adaptable and agile for future change and needs too, and all without the need to embark on extensive updates or change programmes.

What resulted was a ‘plug-and-play’ digital decisioning platform, integrated with eligibility, affordability and identity checks. It is enabling Credit Unions to move away from slow, manual processes and make faster, more accurate, therefore fairer, decisions. The partnership between Soar and Experian is enabling Credit Unions other community lenders and Financial Services companies, to match the speed and instant access offered by both HCSTC companies and mainstream lenders. It is also directly tackling the poverty premium where lower-income households pay more for finance, by offering much more competitive and appropriate rates.

The partnership between Soar and Experian is enabling the growth ambitions of Credit Unions and other community lenders, while supporting and protecting consumers from alternative, and possibly harmful alternatives. As we move through the current volatile environment, it is partnerships such as these that will enable more progressive and modern approaches to tackle the uncertainties that are yet to come. Have a read of the full case study here.