Selling data will soon go out, future's in online marketplaces: ClearScore

In a Q&A, the UK-based fintech firm's CEO and co-founder, and its country manager explain how it is using credit data to play matchmaker between the consumer and the seller of financial products

In a Q&A, the UK-based fintech firm's CEO and co-founder, and its general manager explain how it is using credit data to play matchmaker between the consumer and the seller of financial products

ClearScore, a company that Experian has agreed to buy, recently entered India and plans to tap the country's credit market of 100 million customers. ClearScore’s Chief Executive Officer and Co-founder, Justin Basini, and Country Manager–India, Hrushikesh Mehta, talk to Nikhat Hetavkar about their India strategy and how credit score-based lending operates over the world.

Since Experian is also operational in India, I want to understand what makes ClearScore different. Can you explain your business model and relevance to the Indian market?

Basini: Traditionally credit bureaus have charged people to access data, while our proposition is completely free. Our business model is about creating a marketplace from that data set and using a matching algorithm to connect users with products from lenders, which essentially tells you what products you qualify for. When that matching happens successfully, and I sell a credit card or loan, we as ClearScore make a bounty. We buy the credit data from the credit bureau, The bureau that we work within India is Experian.

Mehta: Initially the bureaus were set up to help the banks control non-performing assets, but with time, consumers started realising that credit scores were being used to determine lending, so bureaus fashioned themselves as paid services for consumers to check their scores. I think data is going to become free in two or three years, especially with the public credit registry coming in. Companies that use data to help consumers and banks as a marketplace are the businesses of the future.

Currently, we're in a situation where credit products are sold and dumped on to a consumer based on the incentive the seller of credit offers, instead of selling what is right for a customer. So our job is to help prime consumers get credit at better terms, help impaired people get credit and finally, renew the credit in the future as well.

How does your model differ from something like CIBIL partnering up with Bank Bazaar? Does your revenue also come primarily from the lenders?

Mehta: It's self-imposed discipline to an extent. So it's consumer first, partner second, revenue third. The matching algorithm ignores how much money ClearScore will make. If you go to certain other sites, you will see only certain banks right at the top, while others will be at the bottom. We're fully cognizant of that. But our whole model of working is based on putting the consumer first. If you are not able to do that, it typically doesn't end up working.

What services do you provide? Have you developed any particularly for India? What differentiates you from your competitors?  

Basini: An important difference is that everything on ClearScore is free. If you look at PaisaBazaar for example, they offer credit reports but you need to pay to get an analysis of your credit report. We analyse your credit report, we tell you what's positive and what's negative about it. We will show you the history, we offer you financial education and all of that will always be free to the consumer.

Mehta: We've also got a Hindi coaching chatbot and the reason this was done was to test usage because it isn't only English-speaking people who seek credit. With the public credit registry coming now, consumers will have a lot more control over their data. The game is about how you use the ,data to educate the consumer, to give the consumer value, to help him shop smarter so hopefully he gets better products at cheaper rates. And if we can get cheaper rates, it means we are starting to really deliver value to the user and that's the marketplace business.

Are there any initial partnerships that you're looking at, like lending partners specially in India?

Basini: At the moment, we're using a third party to source products from the market so that we are able to serve our existing customers. And then, Hrushi's job over the next few years is to sign up all the banks and those conversations are starting now.

Mehta: It will be about 60 banks, it's a coverage of the whole market, so you will have all the banks that are available largely and who are interested in the platform.

Do you have any estimate of the kind of market you're targeting in India?

Mehta: We have 300 million people on the bureau. Of them, about 120 million are credit users. They're largely in urban towns and cities. Our goal is to get 50 million consumers on the platform in three to four years. Obviously, the 100 million will grow every year as credit grows in the country. Currently it is growing at almost 20-30 per cent a year.