In its latest seed round, the Riga-based fintech startup Nordigen raised $800,000 for further expansion from the VC firms Seedcamp and Inventure. With the help of this additional funding, Nordigen plans to disrupt credit bureaus and help creditworthy people get access to loans. Their algorithms have already analysed close to 1 billion transactions to date.
Banks across the world reject up to 90% of all loan applications daily. This is because banks base their decisions on credit history reports from credit bureaus, but not many people have a formal credit history. According to World Bank Group private credit bureau coverage report, only 30% of the global population have any record at a credit bureau. In addition, credit bureaus have been working with the same old tools for decades and their insights are often incomplete and outdated. Bank account data is a good alternative to credit reports. It is full of risk-critical information that provides a transparent and more objective way to evaluate one’s ability to repay a loan in the future. That is where Nordigen comes in the picture.
Nordigen’s core product allows a lender to instantly verify a customer’s real income and spending habits to make the first assessment of their creditworthiness. The solution is based on open banking and the company’s “secret sauce” is the ability to identify risk-critical behaviours in customer account data with unparalleled accuracy.
“It’s hard to love credit bureaus at the moment. What they do was necessary, but with the rise of Open Banking, we’re now able to build technologies that are much faster, more reliable and more customer-friendly than traditional credit checks. This is a great time to build a global alternative to credit bureaus,” says Rolands Mesters, co-founder of Nordigen.
With a growing client base and recognition in the industry, Nordigen has been able to find support from powerhouse investors like Finland’s Inventure and Seedcamp, which joined Nordigen’s pre-seed investor Change Ventures.
“Credit and debt are two major foundations of our financial system. The evaluation of creditworthiness has been much slower to progress, prohibiting many potential customers’ access to financial services. We’re excited to back the excellent founders of Nordigen and strongly believe in their desire to provide a more clear and transparent process making it easier for financial institutions to engage with more creditworthy customers and, in turn, for more customers to engage with financial services,” comments Carlos Espinal, Managing Partner at Seedcamp.
Fintech startup Nordigen was established in 2016 in Riga. Today the company works with banks and alternative lenders in 12 countries across the world, including the Baltic states, Spain, Finland, Poland, Denmark, Sweden, Germany, Czech Republic, Australia and New Zealand.
With the new funds, Nordigen will be hiring across the board with a focus on sales and business development. A big part of the investment will also be directed towards entering new markets, such as Brazil, South Africa, USA and UK.