NB Financial Health
Bobbi Gray / Ellen Galdava
Gina Harman / Andrea Jung
Friday, May 9, 2014
In the U.S., traditional credit scoring approaches are strongest when evaluating consumers on either end of the credit spectrum. Traditional credit scoring struggles in two areas: 1) providing accurate differentiation for the ’broad middle’, and 2) scoring consumers with sparse or no credit history. In emerging economies, the lack of credit reporting infrastructure and data shuts millions out of the formal financial system.
Launched in 2012 and based in Irvine, California, RevolutionCredit was born out of a vision to lead the next generation of consumer credit assessment — positive-selection oriented, consumer-centric and consumer-controlled. The first-of-its-kind solution uses behavioral analytics derived from gamified financial education, delivered at the point of transaction. This provides a complement to traditional and non-traditional credit scores provided by credit bureaus such as Experian.
RevolutionCredit’s program is like ’traffic school’ for credit, allowing customers to swap enhanced education for a minor mistake or earn class ’extra credit’, providing an opportunity to demonstrate positive behavior outside of the formal financial system. Consumers voluntarily choose to complete video and game-based financial capability tutorials and tests offered to them by their financial provider. The consumer’s participation and response to RevolutionCredit’s tutorials and tests is made available to the financial provider to help assess credit-worthiness or fitness for products and services.
In practice, the solution helps consumers with average, borderline or no credit score to gain access to products and terms for which they might not otherwise have qualified. Early results and traction indicate a strong connection between customers’ completion of these tutorials and outcomes such as on-time payment of loans and bills.
“RevolutionCredit’s approach dovetails strongly with the broad industry interest in market-based solutions, and the practical need to build financial capabilities through both literacy and behavior,” said Paul Breloff, managing director of Accion Venture Lab. “Their model cleverly delivers financial training and information, while also improving access and price for underserved populations.”
“RevolutionCredit gives consumers a chance to demonstrate their creditworthiness in a fun, transparent, and forward-thinking way, and also gives creditors a solution for identifying and engaging with aspiring consumers,” said Zaydoon Munir, founder and CEO of RevolutionCredit. “We are thrilled to have Accion Venture Lab as a partner as we develop our long-term vision of financial inclusion in the U.S., and in developed and emerging markets.”
Venture Lab’s impact investments complement Accion’s Frontier Investments Group, which typically invests in established, but similarly disruptive, early-stage companies with demonstrated revenue traction. Both investment vehicles are part of Accion’s ongoing efforts to explore innovative business models that will radically improve the efficiency and enhance the quality of financial-services delivery to the under-banked.
About Accion Accion is a global nonprofit dedicated to creating a financially inclusive world where people have the financial tools they need to improve their lives. We are building the next generation of top-tier microfinance institutions, accelerating start-up companies that serve the poor through our impact-investing initiatives, and helping to create a strong industry with high standards. Over more than 50 years, Accion has helped create 63 microfinance institutions in 32 countries on four continents that today reach millions of clients. The Accion U.S. Network is the largest microfinance network in the United States and has served hundreds of thousands of clients with loans and support. For further information, visitwww.accion.org.
Source: Press Release (link opens in a new window)