County Durham based Growth Capital Ventures has led a £695,000 investment round into Finexos, a fintech platform set to improve access to credit for millions of people around the world.
Oversubscribed by almost 40% from the initial target, the funds will be used to drive forwards Finexos’s market entry strategy as the company rolls out its solution to several key pilot partners looking for a more accurate way of evaluating credit worthiness.
This is the latest EIS-eligible investment opportunity led by Growth Capital Ventures, an FCA authorised investment firm specialising in impact driven co-investment opportunities across alternative asset classes.
Finexos has developed its innovative technology, which combines open banking with Artificial Intelligence ((AI) and Machine Learning (ML), to measure financial capability without the need for a credit score. Where a traditional credit score uses approximately 12 pieces of information, the Finexos solution currently uses more than 220 pieces of data to give an accurate assessment of how a consumer or SME manages its cashflow.
With around two billion people globally unable to access financial services and a further 138m people in Europe estimated to be excluded from mainstream credit, there is a clear requirement to improve financial inclusion by redefining credit scoring.
Norm Peterson, co-founder and CEO of Newton Aycliffe-based Growth Capital Ventures, said: “Over 12 million people in the UK alone are in the high-interest, revolving credit trap as a result of legacy credit scoring. Millions of people are paying to high interest rates due to a low legacy credit score – even though we now have access to the information to readily prove that such a low credit score can be entirely unjustified.
“With the Finexos solution developed and ready to take to the market, the platform is set to transform credit scoring, increasing loan originatation while simultaneously reducing default rates for lenders.”
Established in 2018, the expert team behind Finexos includes an international team of specialists. They include founder and head of product Mark Fisher and CEO Areiel Wolanow, an adviser on AI and Blockchain to the UK Parliament, speaker on financial inclusion at the G20, and designer of the credit scoring engine for M-Pesa, which doubled Kenya’s GDP and lifted 2% of the population out of poverty and forms the template for the Finexos solution. The team also includes chief technology officer Kefirah Kang, who led the design and launch of platform for Hong Kong’s first licensed virtual bank WeLab (2019); and chairman and investor Steve Bone, who has led multiple corporate buyouts and successful exits.
Mark Fisher, founder of Finexos explained: “Finexos can deliver high-impact outcomes for underserved consumers and SMEs and will increase loans originated, at a lower default rate, for providers of credit.
“Finexos combines advanced technologies, commercial acumen and a strong business and operating model to solve an important social and financial issue.
“We are moving at pace and seeing significant traction with customers, utilising technology to provide better outcomes for consumers and lenders that can, overtime, replace the outdated and inefficient way credit scoring works currently.”
He is confident the Finexos platform will develop new markets for any provider of credit while improving credit performance; reduce the poverty premium and help consumers exit the revolving credit trap.
Fisher added: “We have a real opportunity to help consumers meet the cost-of-living crisis by improving financial inclusion and also protecting the more vulnerable.”