Barclays-backed invoice finance start-up Crowdz has partnered with business credit score provider Wiserfunding to predict small- and medium-sized enterprise (SME) default rates more accurately.
Wiserfunding said its artificial intelligence solution delivers up to 95 per cent of default prediction accuracy for Crowdz’ receivable financing investors, 20 to 30 per cent higher than other industry standards which rely on manual risks assessments to identify high-risk customers.
The product is tailored specifically for SMEs with revenue between £500,000 and £200m.
Crowdz, which is taking part in the City regulator’s sandbox, will use the tool as part of its proprietary credit assessment model Smartscore.
Smartscore assesses the probability of default, payment and soon also the probability of supply, environmental, social and governance, and reputational risk.
“The UK market is a high priority for Crowdz and this partnership, alongside our participation in an FCA Sandbox test reiterates our focus on building a responsible and impactful presence in the region as we expand,” said Payson Johnston, founder and chief executive of Crowdz.
“With more UK businesses than ever seeking additional capital to sustain their businesses, the partnership will safeguard Crowdz’ investors in providing financial relief to SMEs and support the broader economy by reducing reliance on government or bank funding.
“Since the start of the Covid-19 crisis, Crowdz has seen a 5,000 per cent increase in business users globally.
“Partnering with Wiserfunding is expected to boost this figure significantly by enhancing the comprehensiveness of our Smartscore.
“As an addition to Crowdz Smartscore, the introduction of Wiserfunding will help investors funding Crowdz’ SME community to better allocate funds, and help SMEs hardest hit by Covid-19, get back on their feet.
“More broadly, by increasing our capacity to fund more SMEs, this partnership makes the market more efficient, mitigates the risk of an SME credit bubble, and will help to rebuild the economy.”
“We are absolutely delighted to be able to support Crowdz in their efforts to fund SMEs’ growth,” said Gabriele Sabato, chief executive of Wiserfunding.
“By providing our independent, accurate and credible credit risk assessment for SMEs, Crowdz will be able to attract more institutional investors to their platform and ultimately, benefit the UK economy by funding a larger number of SMEs.
“In these difficult times, SMEs desperately need smart solutions such as the Crowdz platform and we look forward to playing our role in boosting investors’ confidence.”
Read more: The need to share data
Both Crowdz and Wiserfudning are part of the Covid-19 fintech taskforce, set up in March to enable banks, alternative lenders and private debt lenders to digitally deliver funds to businesses during the crisis.