Fintech Friday: Nordigen – changing the credit score process
Rolands Mesters, CEO and cofounder of Nordigen, spoke with Efma’s Boris Plantier about how his company is an important part of financial inclusion efforts in Europe.
What led to the creation of Nordigen?
Nordigen was founded by me and my colleague Roberts Bernans. We had both studied finance at the same university, so we both had a background in math and a passion for numbers. In 2015 we were researching credit data market when we first stumbled upon the concept of open banking. Open banking means that the customer of a bank owns her own account data and is allowed to migrate her data to any other provider - any other bank, lender, or fintech - using APIs. We also saw that the open banking industry was already taking off and a lot of banks and lenders where using open banking to provide better lending and personal finance services. After months of talking to friends that work in finance, we realized that open banking was missing a critical component.
We recognized that most financial services that wanted to use open banking data in credit risk were struggling to use it — the data was just too raw and unstructured and most institutions could not afford to build their own data science teams to solve this problem. This is when we decided to start Nordigen - a platform that enables access to open banking data and provides ready-to-use insights for banks, lenders, and fintechs. We established the company in 2016 and since then we’ve scaled our platform to 19 markets, including Europe, Brazil, Mexico, and Australia.
Could you present Nordigen's offer?
Nordigen provides a new kind of credit data. Nordigen allows companies to connect to 2000+ banks across Europe via APIs and access customer account information that is helpful in evaluating credit risk. Our clients today use our platform to verify their customer income, perform affordability checks, augment credit bureau scores, or reduce credit risk. The companies that use our platform today are banks, consumer lenders, loan brokers, energy companies and telecomunications companies.
Our aim is to build a new form entity that co-exists alongside the traditional credit bureaus to provide greater financial inclusion. Any company that provides goods or services on credit needs to do a credit assessment. Traditional credit bureaus are often limited in the available data about consumers and businesses, which is why open banking data is gaining popularity. In the last few months we’ve seen a wave of companies rebuilding, digitalizing, and automating their customer onboarding flows and open banking has been gaining popularity.
What's coming next for Nordigen?
Our immediate goal is to build a pan-European credit data platform that allows any business in Europe to evaluate the creditworthiness of any European customer. In 2017, around 116 million adults in Europe were unbanked. Today the situation is improving, however access to affordable financing and financial inclusion is still a critical problem to many Europeans. Today our platform covers 10 European markets, but we plan to cover all of Europe, following the rollout and adoption of PSD2 (Payment Services Directive 2), which regulates open banking in Europe.
We don’t plan to stop there. Financial inclusion is a global problem and we believe open banking might just be the cure. The challenging part is to build the right tools that allow developers to build the right applications that address financial inclusion. It’s not an easy challenge, but we’re in it for the long haul and we’re excited to be part of the open banking movement.