The problem we solve, the solution we offer
4.5 billion people do not have access to essential financial services. The recovery after the global credit crunch painfully showed that global credit tripled, but only with a small group of people. Now, in the storm of a new crisis we experience that governments and banks are spending awesome amounts of funds in new credit to support the economy.
The problem we solve
Self-employed people, entrepreneurs, multinational companies, they all benefit from this. Six-month payment holidays are allowed to both consumers and entrepreneurs for their mortgages, credit cards and other loans. But:
-> Who of them is actually capable of paying their borrowed money back?
-> Who is aware that money has to be put aside now for paying back?
-> Who of them does understand how to prepare for repayments and thinks about repayment strategies?
-> Who of them has the self-motivation to actually do so?
-> Who of them has the skills to do it smartly without digging deeper financial holes?
-> Who is actually willing to pay back the borrowed money?
It’s all super difficult: 90% of Americans don’t even know who to calculate compound interest! 85% of people in France have never taken a course in financial budgeting or financial education. And that’s more or less true for the whole of the European Union as well!
So, in this COVID-19 crisis we are digging a huge financial hole for a lot of young entrepreneurs, self-employed people and financially illiterate people.
For lenders this creates a never seen before huge risk in never getting their money back! A recent report by the Boston Consulting Group argues that banks will need to put in place individual company and consumer stress tests to anticipate looming credit problems but warns that legacy IT platforms may prevent a clear picture from emerging. “Although all industries will be impacted by Covid-19, the effects will vary by sector and client,” states BCG. “Risk drivers specifically related to the Covid-19 outbreak are not currently captured by credit-ratings systems. From the lenders’ side: what contact strategies should be put in place to collect the money in a sustainable way?
The solution we offer
Psychometrics is a branch of psychology that designs assessment tools to measure personality traits, skills, knowledge, abilities and attitudes. Psychometrics are proven in human resources (Myers Briggs) and marketing.
AdviceRobo applies psychometric processing to make assessments of the credit profile of a person or entrepreneur. The humanized credit intelligence platform combines psychographic profiles, screen behaviour, browser and device information with transaction data to give a humanized credit profile. We scored over 2 million people of the past 5 years, stand alone or as enrichment of existing credit systems. We helped 20% of them to get a loan safely. People who were rejected in the traditional system. Default rates over this group were 20% lower than the average base default rate.
And now, in times of crisis when traditional credit assessments are not working anymore, it’s more important than ever before to provide risky customer segments with these scores.
-> Customers applying for a payment holiday all should be scored.
-> People who are in arrears should be scored.
-> All new applicants for a credit should be psychometrically assessed.
Not only to help lenders to better asses the risk in these weird times of crisis. But also, to prepare personalized communication strategies for collection of payment holidays and loans in default. This can really safe lenders billions of Euros in operational collection costs in the upcoming years.