Abound Raises £500 Million for Open Banking-Based Lending Business

Abound, a UK-based lending service that uses open banking data and machine learning algorithms to build better credit scores, has raised £500 million ($601 million) in a recent funding round. The funds will be used to finance loans, bring more customers on to the platform, and invest in its technology.

The company plans to use its service, which offers loans of between £1,000 and £10,000 with a repayment period of up to five years, to supplement regular monthly incomes, with interest rates lower than those offered by banks.

Abound, formerly known as Fintern.AI, plans to expand its direct-to-consumer offer in the UK and as a B2B service in Europe. The company’s new funding includes both debt and equity from clients of Waterfall Asset Management, U.S. bank Citi, and Hambro Perks, K3 Ventures, and GSR Ventures.

Abound is already on track to loan out £1 billion ($1.2 billion) by 2025, and CEO and co-founder Gerald Chappell said he sees the company as going beyond credit scoring.

Abound’s success and the increasing adoption of open banking by fintech companies demonstrate a shift in the lending industry. Traditional credit scoring methods and legacy systems are being replaced by innovative technology that relies on open banking data and machine learning algorithms to create more accurate and fair lending decisions.

Abound’s solution addresses a real need in the market for loans that cater to the “near prime” consumer segment, which has historically been underserved by traditional lenders. The use of open banking data allows Abound to create a new kind of credit score that is more reflective of an individual’s true affordability and risk profile.

This shift in the lending industry is not just driven by technology, but also by changing consumer attitudes towards financial services. Neobanks and fintech apps have become increasingly popular, providing consumers with a more user-friendly and accessible way to manage their finances. The demand for more innovative and customer-centric lending products is only set to increase, providing a significant opportunity for fintech companies like Abound.

Moreover, the success of Abound’s approach demonstrates that there is still significant room for innovation in the lending space. While traditional banks have been slow to adapt, fintech startups are stepping up to fill the gap and provide consumers with more options and better service. As the industry continues to evolve, we can expect to see more companies like Abound emerge, using technology to create new lending solutions that better meet the needs of consumers.