Digital lending startup Koyo has raised $ 4.9 million for its plan to sell loans to new migrants and people with poor credit histories.
The London-based company said up to eight million people in the UK “don’t have enough credible credit data to count for traditional borrowing options.” This leaves these clients facing high borrowing costs from traditional institutions, or pushes them to payday lenders with even higher fees.
Koyo, founded last year, has raised funds from venture capital funds Forward Partners and Seedcamp. These funds were the first investors in financial technologies as important as Revolution, Transfer and Zopa.
Other notable Koyo investors include founder and CEO of LendInvest real estate platform Christian Faes, as well as founder and CEO of RegTech ComplyAdvantage Charlie Delingpole.
Koyo, founded by former investment manager Thomas Olszewski (photo, second from right), is run by a seasoned fintech team.
Its CTO is Guy Evans, who previously held the same position at LendInvest. The company’s chief credit risk officer is Kevin Allen, who held the same position at peer-to-peer lender Ratesetter, while chief marketing officer Peter Kent was global head of digital marketing strategy at South Bank. African Investec.
Koyo plans to start trading later this year and says the open banking process customers will need to complete as part of their applications will allow him to “offer credit at a competitive price, without the use of guarantors or hidden charges.” .
A change in EU law earlier this year introduced open banking, which means consumers can allow businesses, other than their bank, to access their financial data.
Advocates say this potentially allows customers to get better deals, such as cheaper overdrafts, as well as speeding up the switch between banks and other financial institutions.
Olszewski, who is also the startup’s chief executive, struggled to secure first-hand credit when he left the United States for Britain three years ago.
He said: “When I left the United States for the United Kingdom, my credit history did not come with me. This made it difficult, if not impossible, to obtain a credit card or a loan. I realized that this is an issue that affects millions of newcomers to the country, but also people who have not built a credit history in the UK in general.
Olszewski added: “Although Koyo is based in London, we have global ambitions. Our aim is to expand our product offering in the UK and explore other markets where thin file customers are underserved ”.