Dump Third-Party Data: Lenders Embrace Solo’s Revolutionary Credit Bureau Concept

Credit bureaus relying on outdated third-party data are only getting a small piece of the puzzle, Georgina Merhom says. User-permissioned data sources, that consumers provide with their permission, come from a variety of places. In addition, user-permissioned data sources replace the self-reporting process, brokers trust between the institution and consumer and identifies opportunities that the bank would have otherwise overlooked, Merhom said. Building a better credit bureau or finding new ways to verify data from people without a lot of credit is not a new concept. “It costs banks $29 billion a year to process applications, and that’s not even including the money they pay credit bureaus,” Merhom said.

According to Georgina Merhom, credit bureaus are only seeing a small piece of the puzzle by relying on outdated third-party data.

“The credit bureaus are super relevant, but when it’s used to identify that a person didn’t pay one bill on time, it’s a punishment. If you are only following the money, you can miss out on a lot of signals,” Merhom told TechCrunch.

Merhom is determined to challenge the status quo with her company, SOLO, a first-party data collection and reporting engine. SOLO integrates user-permissioned data sources, such as financial transactions, online records, and digital footprints, to provide a more comprehensive understanding of an individual’s financial behavior.

Merhom explains that user-permissioned data sources come from a variety of places, including bank accounts via Plaid, Teller, and TrueLayer, as well as platforms like Amazon, Shopify Square, Stripe, and PayPal.

These user-permissioned data sources replace the traditional self-reporting process and build trust between institutions and consumers. They also help identify opportunities that may have been overlooked by the bank.

In her previous role as a data scientist in the cybersecurity industry, Merhom learned that a wider variety of data, along with its context, can paint a much fuller picture. She put this knowledge to use when she founded Zivmi, a cross-border payments app in Egypt, which she later sold to the National Bank of Egypt.

It was during her time at Zivmi that Merhom got the idea for SOLO. While working with freelancers who did not have bank accounts, she found alternative ways to verify their work history, experience level, and client ratings through platforms like GitHub and Upwork.

As the business grew, Zivmi started underwriting its customers and developing technology for that purpose. Through this, Merhom recognized the need for a new type of credit bureau.

Building a better credit bureau or finding alternative ways to verify data for those without a strong credit history is not a new concept. Other companies, such as Altro, Kredivo, Bloom.io, and Masa Finance, are also tackling this challenge in various ways.

Over the past two years, Merhom and full stack developer Luis Troni have been working on SOLO. They recently revealed it to a group of hundreds of financial institutions and now aim to secure 100 bank pilots in the United States this year. They also plan to seek venture capital funding.

According to Merhom, their goal is to measure various metrics, including reducing application processing time from up to two months to just minutes, decreasing costs by 70%, and increasing value per customer.

Merhom explains, “It costs banks $29 billion every year to process applications, and that doesn’t even include the fees they pay to credit bureaus. If we can prove that we can reduce these costs, banks no longer need to have loan officers cross-reference bank statements and accounting and spend valuable time recalculating. Furthermore, if our customers can identify new opportunities within their portfolio and sell more to their clients, then we have succeeded in our mission.”

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Ava Patel

Ava Patel is a cultural critic and commentator with a focus on literature and the arts. She is known for her thought-provoking essays and reviews, and has a talent for bringing new and diverse voices to the forefront of the cultural conversation.

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