PwC study finds 4.3m Germans unjustly denied access to credit

By Ryan Weeks on Tuesday 18 October 2016

Alternative Lending

New study applies auxmoney credit model to €66bn of rejected bank applications, finds around a third creditworthy.

A new study from PwC has attempted to gauge the impact of alternative lenders in opening up access to credit in Germany. The study found that €66bn of credit applications do not get serviced by the banks each year, due to “supposedly” poor credit ratings. But according to auxmoney’s credit assessment model, 30 to 35 per cent (or €19-22bn) of this outstanding demand is unjustly rejected. Auxmoney says that this amounts to around 4.3m people in Germany.

But is this divergence in acceptance metrics the result of a superior underwriting model, or simply the product of a bigger risk appetite? Andreas Barthelmess, CCO of auxmoney, says: “Banks see low earners, students and freelancers and generalise them as risk groups – we don’t.” He went on to explain that auxmoney’s “differentiated methods for credit checks” are fairer to customers, and that these serve to significantly enlarge the credit market.

The comments of Felix Hasse, a partner at PwC, appear to corroborate the notion that auxmoney is employing credit assessment techniques that are genuinely differentiated from those of the banks: “The intelligent use of digital data allows the credit check to grant loans to more than 30 percent of those who had previously been rejected.”

PwC expects to see an uptick in marketplace lending volumes due to increasingly restrictive traditional lending guidelines in mainland Europe. Similarly, the German Federal Bank anticipates continued growth from the marketplace lending sector, as it outlined in a paper in August.  

Auxmoney has been in operation for nine years, and has lent close to €320m, with a market share of 21.87 per cent within mainland Europe’s marketplace lending space, according to the Liberum AltFi Volume Index CE

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