Origination & Decisioning | Europe

More credit, but with less risk

auxmoney describes itself as the leading digital-lending platform for consumer credit in Europe. Its mission? Give more people the chance to get a loan. To this end, the company has developed a range of unique technology over the years to differentiate credit inquiries more effectively, and to support people with loans more responsibly.

As part of this, auxmoney enables private and institutional investors to invest directly in pre-approved borrowers. In the first half of 2018 alone, the company funded more than 33,000 new loans with a total volume of €255 million, representing an increase of about 90% over the previous year.

The problem with defaults

There was one issue in particular that auxmoney wanted to solve…

Defaults that occur early in the customer’s lifecycle are likely to be more costly to investors, to the extent that they reduce returns more drastically than slower defaults. There were a number of actions that auxmoney could take to avoid this, but it was equally important to avoid impacting its broader mission to its customers.

This presented auxmoney with a unique challenge. Could the company maintain its current acceptance rate using a single-scorecard approach, while simultaneously demonstrating a reduction in losses? Better yet, could it potentially improve these metrics?

Navigating the contradictions

When it comes to optimising risk scores, often the most powerful indicators can be contradictory. For example, indicators of high risk may also correlate with a high probability of take-ups. Likewise, the ability to deal with short-term credit commitments may not necessarily lead to a longer-term capability to manage finances.

“4most’s broad range of knowledge and experience made a meaningful contribution to reach our goal of extending credit access to more people.”

Justin Silk Head of Risk Management, auxmoney

Three is the magic number

We delivered our solution in three simple steps:

auxmoney’s approach to lending was already relatively progressive, especially when compared to typical German banking practices. Still, our specialists advanced it further with conceptual ideas and support.
We also generated additional volume, helping auxmoney achieve its aim of extending credit to more borrowers.
Throughout, different potential strategies were compared to reach the best possible solution.

Great for investors and customers alike

The combination of our team’s knowledge and expertise provided auxmoney with an enhanced and trustworthy risk-based strategy. As a result, auxmoney has been able to optimise volumes of business and maintain returns, while still driving appropriate refinance levels.

Can 4most support your organisation in a similar way? Let us know how we can help you by completing our short contact form.