AI-driven consumer lending startup Abound raises $601 million.

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14:53 | 7 March 2023

AI-driven consumer lending startup Abound raises $601 million.

U.K.-based startup Abound announced March 6 that it has raised $601 million in debt and equity capital to grow the “open banking” industry. The funding will be used to expand access to consumer credit and reach more potential customers.

The platform, like other open banking startups, uses banking data taken from the APIs of major banks and creates new avenues for lending. Abound makes personal loans without using credit scores. Instead, the company looks at bank transactions and uses artificial intelligence to create risk profiles of each customer. This allows the company to offer customers a lower interest rate than conventional lenders.

Startups like this can help consumers access credit despite a bad credit history, or even help them improve their credit history.

The open banking revolution
Open banking has existed for quite some time in the form of budgeting and expense-tracking apps like Mint, which aggregated your banking data through APIs. But the world of open banking has taken on a larger role in the fintech world.

In 2018, the European Union’s Payment Services Directive, an initiative that would require banks to make customer data more accessible to them through APIs, emerged.

Open banking platforms are generally known to be more intuitive to navigate than traditional banks. Without relying on credit scores, consumer lending platforms can offer a more personalized lending and repayment program.

As a result of the EU decision, consumer lending programs using open banking technology have entered the arena. Tink, an open banking company based in Sweden, gives financial institutions access to data from payment applications such as PayPal. Finicity, another Utah-based platform, connects disparate fintech platforms together so that users can better interact between them.

We hope you found the information useful. Stay tuned for more information.

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