I am fascinated by debt: the advance of cash today against the mere promise of payment in the future. A promise that depends crucially on trust and knowing who the borrower is. For that, financial institutions rely mainly on credit bureaus. But not every country has a perfectly functioning credit bureau, in which case access to credit suffers.
In Latin America, about 41.2% of the adult population is covered by a credit bureau. In some countries, like Haiti, coverage is just 1.6% which means that a large percentage of the adult population have problems gaining access to credit via formal institutions. The covered population has, in many cases, very thin credit files that are not informative enough and prevent financial institutions from reaching a decision; a default is much more expensive than a decline and lenders end up declining most applicants. The online lending industry has an average of 10% acceptance rate (worldwide), while in some countries the acceptance rates are around 1%-5%.
Although the coverage of credit bureaus is low, the number of e-mail user is high. The ITU estimates that 65.9% of the population (16-74) of the Americas use the internet. In some countries the penetrations is low, like in Haiti (12.2%) and El Salvador (29.0%), while in others is relatively high, like Trinidad & Tobago (73.3%) and Argentina (70.2%). E-mail tends to be one of the most common, if not the most common, internet activity.
Email users receive an average of 88 emails per day and send an average of 34 emails per day. Every email we send leaves a digital trail. And all that information, combined, paints a portrait of us. What if financial institutions could leverage all that information to better know their potential clients? Well, that is what VerumView does.
VerumView is an Israeli, API-based know-your-customer (KYC) service startup selected to integrate to Finconecta. VerumView is an alternative credit bureau that uses data from end-user’s e-mail inbox to generate multiple actionable data points for real-time decision making. With the user’s consent (in a frictionless and user-friendly user experience), and without reading the user’s email or storing any raw data, VerumView gains access via email providers to the user’s inbox to verify the user’s identity and provide data and business insight in seconds. It uses an automated scanning tool, based on advanced and complex algorithms, to assess the risk profile of the end-user, which is particularly useful when credit bureau files are not existent or too thin, as is the case in many countries in the region. It can also be used for fraud detection, anti-money laundering, and financing of terrorism prevention. VerumView’s solution can verify who is sitting at the keyboard and helps preventing identity thefts.
The service allows financial institutions to increase their acceptance rate, offering access to credit to the millions of consumers and firms currently unserved or underserved, with a minimum amount of friction for the customer. In addition to expanding the business, VerumView also helps to mitigate credit and fraud risks and significantly reduce the customer acquisition costs.
We hope to see this and other FinTechs integrated with financial institutions in the region, in Foromic, in October 2017.