Apple launches borrower rating

[AVIS D’EXPERT] Apple recently acquired Credit Kuros, a company specializing in borrower scoring. Decryption with our expert Guillaume Almeras, founder of the monitoring and advice site Score Advisor.

Apple just bought Credit Kudos. If, thus stated, the information does not make a very catchy title, it nevertheless deserves some comments because it could well be a turning point.

What is at stake is what is called “scoring”, that is to say the rating that banks apply to all individuals who seek financing from them. Consisting of various elements of assessment whose composition is, in France particularly, kept jealously secret by the banks, this rating attempts to identify the risk of non-repayment of each potential borrower.

Suffice to say that we touch here on one of the most essential know-how of the banking profession. And, for a very long time, this risk was most often apprehended by account managers on the basis of payment history and accounting and financial documents submitted by their customers, on the direct knowledge they had of the latter, as well as of the context in which they operate.

An increasingly automated practice

However, with digitization, this practice has changed a great deal: it is increasingly automated, it aggregates increasingly varied elements of appreciation and, given these two conditions, it is increasingly carried out by non-bank players.

Two elements, above all, have begun to radically alter the credit rating. This was essentially based on accounting and heritage elements (on the basis of which guarantees could be taken). She is now interested in the regularity of income and the way in which expenses are managed. We can work with fewer and fewer guarantees, but borrowers are asked to have direct access to all their accounts. The rating was only initiated once a request for funding was made. It tends to become constant, prior even to requests. To generate these and react very quickly, almost instantaneously, in the event of a need for financing, as currently illustrated by split payments. However, once the ratings become dynamic in this way, players other than the banks can not only do them instead of the latter, but above all they can do so more easily than them.

This is precisely what Credit Kudos offers, a rating platform created in London in 2015 and dedicated to all those who have been refused credit by banks or who do not contact them, foreseeing that they will be refused. An alternative rating platform, Credit Kudos requires applicants to have direct access to all their accounts and income (according to the terms of aggregation of accounts opened by the “open banking” provisions). The platform adds other elements of assessment and develops its own rating, on the basis of which, if it is favourable, it offers lenders, including banks, to meet the financing needs expressed.

Why choose to acquire such a platform? For Apple, it’s not a big acquisition: Credit Kudos is valued at $150 million. For commentators, it would thus be for Apple to extend the use of its payment card in countries other than the United States, by adding a split payment option (for a year, the rumor runs that ‘Apple wants to develop in this niche).

Mixed success for Apple Pay

Apple Pay, launched seven years ago, remains a mixed success. No more than the banks, Apple has not yet succeeded in massively transforming mobiles into means of payment. Only 6.1% of mobile users who have installed ApplePay use it to make purchases – even though in the United States, 70% of businesses now accept ApplePay.

But we can see much further. The important thing, in fact, is undoubtedly that Apple thus puts a foot in the scoring. Because, having Credit Kudos with its own rating methodology, which it could considerably enrich and expand based on the data at its disposal, could the firm at the apple not largely replace the banks in the long term? assessment of financing risks?

Not to become a bank, that is to say to take the credit risks itself, but to be the first intermediary in terms of banking services and thus evolve into an essential platform for the banks which will come to seek customers there. .

Tomorrow, to obtain credit, will we mainly turn to Apple? Or to Google or Amazon, equally able to offer comparable offers? These players could actually be tempted to develop a platform like Credit Kudos on a very large scale. But we can also imagine that our purchases, including real estate, being made more and more online, financing options will be offered directly on the merchant sites to which we will be able to respond from our Apple or other account, on which a credit note will appear. For other financing needs. It is therefore not that we will specifically address Apple to finance our purchases. We will no longer go directly to our bank.

By Guillaume Almeras, founder of Score Advisor

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