NestEgg wins Innovate UK Grant

NestEgg has won a grant from Innovate UK’s Innovation in Financial Services Competition.

The Innovate award recognises NestEgg as an innovative company that is improving the use of Open Finance.

Open finance is the next iteration of Open Banking. In addition to connecting bank accounts, people can choose to share information about their assets including pensions, savings and investments.

Net worth matters

In effect, lenders currently use an individual’s ‘profit and loss’ for credit assessment (credit repayments and spending patterns). NestEgg is revolutionising this by including a borrower’s ‘balance sheet’ (assets minus debt), giving lenders an unparalleled view of net worth for the first time.

For the newly marginalised, evidence of assets could offset problems on their credit file, like recent missed payments. Showing positive net worth through savings, investments and property can move a decline to an accept.

As a result, decisions are better aligned with the real circumstances of the borrower and the risk appetite of the lender.

Even more new features

Most decisioning platforms are data siloed. This grant from Innovate UK accelerates our ability to bring more data sources together for fairer, automated decisioning based on a more accurate picture of an applicant. This includes:

  • Insight into credit card behaviours.
  • Details of assets, including the main property, savings and investments.
  • A calculation of net worth.
  • An indication of the direction an applicant’s financial health is taking.

Like NestEgg’s use of Open Banking and credit data, these new data sources will be combined for a more rounded view of an applicant. Additionally this new data will feed into a Machine Learning model to improve decisioning, speed up loan turnaround and ensure access to loans for the financially excluded.

Finally, new tips and advice will be provided to declined borrowers based on these new data sets.

Supporting good regulatory outcomes

The FCA’s 2022 Interim Report on Failures in the Credit Information Market (to which NestEgg gave evidence), developed theories of harm that resulted from the use of insufficient credit data. This market failure means consumers are more likely to get a poor deal, costing money and time and making it harder for people to meet financial goals.

The report found there was limited combining of data sources. NestEgg is able to support the delivery of one of the key remedies: “The use of a wider variety of data and more sophisticated analytical techniques indecision making should increase the overall quality of lending decisions.”

Now more than ever

Record numbers of people are financially excluded. An estimated 17.5 million people lack access to affordable credit according to Fair4All Finance. There’s a shortfall in affordable credit of £3 billion. The lack of access to affordable credit has exacerbated its impact on individuals. Especially in the face of high inflation and rising interest rates. This is why it is more important now than ever to ensure that individuals are given fair access and accurate decision making.

Get in touch

This funding will allow us to support responsible lenders to further promote financial inclusion. Find out how NestEgg can help you grow your loan book, contact us to book a demo.

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Adrian Davies

Adrian is a co-founder at NestEgg. He is an alternative finance and credit union expert. Adrian has 25 years’ experience in the money advice and responsible lending sectors, supporting credit unions with innovative ideas so they can grow and meet member needs.

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