Beyond P2P: Companies on the Cutting Edge

Beyond P2P: Companies on the Cutting Edge
Panelists: Mikael Hussain, VP of Credit at Klarna, Paul Ebert, SVP of Strategy & Marketing at Borro; Sebastian Diemer, Co-Founder & CEO of Kreditech
Moderator: Karl-Magnus Wadsack of Equifax

Our panelists represented three unique fintech companies: Klarna, Borro and Kreditech. Each panelist explained their business model:

  • Borro’s innovation is in serving the overbanked sector rather than traditional fintech subprime borrowers. It does this by using luxury assets as collateral, thereby overcoming the challenge of cash flow based credit scoring. Borro provides short-term bridge loans to wealthy individuals who have liquidity needs and accepts only luxury physical assets as collateral -- including jewelry, watches, art and antiques, car collections and fine wines. The product differs greatly from classic PDL or installment loans: high loan sizes, longer terms and lower rates (19-56% APR). Borro’s big challenges include performing fast valuation of luxury collateral and collateral collection.
  • Kreditech makes regular, non-p2p, online PDL and installment loans. Their disruptive innovation is in using extremely sophisticated scoring to evaluate unbanked or deeply underbanked borrowers. Kreditech will assess 20,000 data points when processing an application, using big data. In addition to ‘regular’ items like a purchase history, Kreditech will evaluate highly idiosyncratic data points -- like the fonts downloaded to a borrower’s computer. (They note that certain online gambling programs come with specific fonts.) However, the company uses a relatively smaller number of core indicators, which account for most of the credit decision.
  • Klarna’s goal is to make it easier for consumers to transact online, separating the actions of buying and paying. It originates loans at online shopping checkouts, allowing buyers to receive goods before entering any payment information. Klarna assumes credit and fraud risk on behalf of the merchant. About 55,000 websites globally use Klarna. Founded in Sweden, Klarna serves 18 markets globally.