Founded last year by Thomas Olszewski, the FinTech firm aims to secure loans for people with a limited credit history through the use of Open Banking data.
“If someone is new to the country, or otherwise has a thin credit file, it can be difficult for that person to access credit,” said Olszewski. “For example, if you’ve been in the country for a year or two, and you’d like to get a personal loan, the types of loans that would be offered to you would be payday loans (1,000 percent-plus APRs), or longer-term loans in the 50 [percent to] 99 percent APR range that may require a guarantor.”
Customers who have little or no information in their credit files run into issues because most lenders use the three main bureaus — Equifax, Experian, TransUnion — to make credit decisions.
“We estimate 15 [percent to] 20 percent of the population [is] not captured by bureau data,” added Olszewski. “Koyo is unique in that we require all customers to connect their current account to our platform using Open Banking, and we make a lending decision based on the transactions in that customers account, rather than just looking at the credit score. So, if we see the customer has regular income, [and] has a reasonable expenditure relative to the size of their income, that customer may be eligible for a loan from us.”
Koyo, which is expected to launch later this year, will typically come out 50 percent to 90 percent cheaper on an APR basis than its rivals — including Amigo Loans, 118 Money and Sunny. Koyo won’t charge late fees, early repayment fees, loan origination fees or any fees other than interest.
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“We expect our representative APR to be in the 35-percent range,” said Olszewski. “While this may be expensive to people who have access to high-street bank loans, it is a really exciting proposition for this market segment.”
