Scots firm soars as Covid drives need for real-time credit checks
SCOTTISH fintech Directid has doubled revenues during the Covid19 lockdown as banks and other businesses fuel demand globally for real-time credit checks.
“Historically, data from credit reference agencies has always referred to what you did in the past and doesn’t tell lenders about your situation today,” said Directid chief executive James Varga.
“The world has changed a lot in the last three to four months with the pandemic, so knowing that you had a job a year ago is irrelevant to businesses who need to assess your credit risk and affordability now.”
Mr Varga said the Edinburghbased business had won new customers in the last four months including investment group Standard Life Aberdeen, a major UK bank and food delivery company Deliveroo, which needs to run checks on its drivers.
“We’ve seen revenues double in the last four months,” Mr Varga said. “I think businesses have realised that, because the landscape has changed so much, the market has changed too, so they fundamentally have to look at better ways of doing what they do. How can you offer a loan based on data that’s two years old?”
Directid, which rebranded from its previous name, The ID Co, in January, said its data sharing platform now connected to around 13,000 banks across 45 countries.
“What that means is our coverage could access about 1.5 billion people, and that’s a good portion of the world’s population,” said Mr Varga, who was born in Vancouver, Canada.
The company’s technology analyses live financial data including online bank statements, income, cashflow, credit agency records, bank verified identities and other data to help lenders make accurate, personalised decisions based on real time information, rather than traditional credit scores.
“Doing a better check doesn’t mean fewer customers will get the loan – it means the loan might be more personalised to you as an individual,” Mr Varga said. “This is particularly the case for customers with thin credit files; for those who haven’t had loans before and may now need them; for people who might be new to a country or for customers who are financially distressed.”
During lockdown, Directid also launched a new collections and recoveries tool that it has developed with some of the UK’S main banks, lenders and debt collections agencies. This uses real time data to help banks and their customers agree an affordable repayment plan.
“There’s an opportunity here for businesses to change the way they interact with financially distressed customers,” Mr Varga said. “If you’ve lost your job and can’t make your car loan repayments, let’s figure out what you can afford. It’s about having an up-front, candid, evidence-based conversation in a way that still supports customers, but aims to reduce anxiety and stress by streamlining the collections process.”
Directid employs 23 staff and has bases in London and San Francisco as well as Edinburgh. No staff were furloughed and the company is currently recruiting for six roles in sales, marketing, customer support and data science.
After raising $2m from investors last May, Mr Varga said the company had secured further funding and would be looking to do “a bigger fund raise” soon.
The Directid team helped to pioneer open banking – which allows customers to safely share their bank data with third party providers – by working with industry regulators to shape the required European Union regulations. The UK was the first country to introduce open banking in January 2018. A further 17 countries have followed.
Mr Varga said Covid had accelerated the move to digital rather than physical transactions, including the use of cash.
“If I need to provide copies of my bank statements or my driver’s licence and can’t go into a branch, I need to find digital ways to achieve that trust and validation,” he said.