The deal will see October using Yolt’s Account Information Services to utilise open banking data in its credit assessment process for SME lending. It is to go live in France, Italy, Spain, the Netherlands, and Germany.
Patrick de Nonneville, CEO of October said: “As the leading European platform in SME lending, we constantly invest in our own technology but also opt to buy when it’s more efficient. For example, given the importance of bank transactions in our scoring and the current low level of Open Banking adoption by SMEs, we’ve built our in-house pdf extraction systems; but as this adoption improves, we aim to switch to direct connections as much as possible. Yolt’s strong European coverage corresponds to October’s European footprint and enables European SMEs to link their bank accounts, so that we can assess a broader profile of credit worthiness and speed up our decision process even more, supporting our mission to finance businesses better.”
Collaborating to improve coverage and make the process easier
Since 2016, October has been using non-standard data in the credit underwriting process, facilitating access to its client information automatically, quickly and in real time – and in turn, increasing the accessibility of credit to many SMEs. Yolt enables October to leverage Open Banking in its 5 countries of operation with a strong coverage of local banks.
Through this collaboration, Yolt and October will explore how open banking can play an increasingly vital role in providing greater financial inclusion for SMEs, whilst making the process much easier when it comes to applying for a loan.
According to the company, Yolt’s open banking data provides a broader profile of the loan applicant and hence, broadens the options for those businesses looking to access credit.
Broadening the reach of open banking
Open banking payments allow customers to pay for services or goods in shops or online directly from their accounts rather than using a credit or debit card, as well as creating competition and choice in ways to pay and be paid.
In the Open Banking Impact Report published by the Open Banking Implementation Entity (OBIE) it was found that those customers using personal finance management apps, 75% said, it is helping them to keep on top of expenditure and keep to a budget (64%). Similarly, 64% claimed that savings apps had increased their total level of savings.
The data also showed that over three-quarters (76%) of people saying they will or are likely to continue using the services and 90% reporting they are easy to use and set up. 83% of respondents indicated that they would be interested in expanding their use of open banking-enabled services.
Nicolas Weng Kan, Chief Executive Officer at Yolt, said: “We are thrilled to be working with October who are as innovative and technology-obsessed as we are at Yolt. We’re confident this collaboration will help to improve the lending experience for SMEs, providing broader credit options quickly and accurately. This does not only make the credit application process faster and more transparent, but also fairer.
“With open banking, businesses have control of their own financial data, and it provides an easier way to verify income and demonstrate creditworthiness. We’re delighted to be in a position where we can use our experience, being one of the first to start brokering open banking and the only pan-European provider, to broaden the reach of businesses benefitting from credit scoring whilst making processes more efficient for platforms like October.”