By Daniel Lanyon on Thursday 21 April 2022
Immigrants cannot 'passport' their credit history from one country to another fuelling financial exclusion. Revolut's ex-lending boss wants to change that.
The challenger credit card race is heating and one new fintech aiming to take on Amex has got BNPL-like services from Monzo and Curve in its sights.
Pillar, a new credit platform for immigrants, has raised a pre-seed round of £13m led by Global Founders Capital and Backed VC.
The company, founded by CTO Adam Lewis and its CEO, Revolut’s ex-head of lending Ashutosh Bhatt, is developing a lending platform that will provide immigrants with access to credit products when moving to a new country. A launch date is planned for the third quarter of 2022.
With the current structure of the credit referencing market, a consumer cannot take their credit file from one country to another. This means nearly all but the wealthiest immigrants find themselves excluded from everyday products such as credit cards and loans. Those that do manage to access a product find themselves paying a disproportionately higher cost of borrowing.
The central idea of Pillar, Bhatt told AltFi, is to make the accessing of credit for immigrants easier and thereby build something that will also appeal to all customers, immigrant or not. This is both to capture a generational shift in working patterns that will see a hugely more mobile generation of workers, as well as a longstanding problem for those setting up a life abroad.
Bhatt knows the issue only too well when as an immigrant to the UK from India with a good job at Barclays Bank in 2008 but was refused credit to get an iPhone.
“Fourteen years later, and the world of credit still hasn’t changed, so we have set upon building a globally scalable platform that breaks down data silos and credit borders as well as solves this massive problem faced by financially secure people moving to a new country.”
Importantly, though is the play on an increasingly global workforce as remote working becomes the norm.
“The next generation is way more mobile than us way more global than us. They are global citizens of the world” he said.
“You've got Gen Z that it's not got a permanent address and keep moving from city to city. We are for them,” he said.
While the likes of Nova Credit are operating in the same market, albeit in a B2B fashion, nobody is trying to solve the problem directly for consumers. That’s where Pillar is aiming to fit in as a “spiderweb” of data allowing a “true global credit passport”.
“This means no matter where you go, your credit follows you. Up until now, no one has done it properly. Amex has done it for uber rich people, HSBC has done it for their premier clients. We want to do it for everyone. We are trying to help people get on the credit ladder," Bhatt said.
Users will be required to connect their bank accounts via open banking which will help build its credit decisioning. The use of open banking is key and would not have been possible a few years back, he says, owing to a lack of coverage outside of the UK. Now, with open banking having reached critical mass in more and more areas it is.
The end goal is that users will have the option to build their credit records in US, Australia, UK. Pillar will operate out of both the UK and US. These being “the two biggest immigrant hubs” says Bhatt.
“At my previous role at Revolut, it was a herculean task to get credit bureaus coordinated across countries, they [the credit bureaus] just don’t have the tech to be joined up outside of each region. As a result, a data disparity exists that means people have to start again every time they move to another country. Our intention is to look at consumers based on their credit footprint globally, not on a country by country basis.”
The UK and Europe are “just the beginning”, Bhatt says, with plans to launch across the US, Africa and Asia.
“It is about time that credit products, as well as credit data systems, are redeveloped from scratch, there has been no real innovation in the past half a century in this space.”
The business model will target subscriptions to lines of credit rather than by earning interest from monthly balances not being paid off, Bhatt says. “We are not in the business of making money from interest”.
Cash to fund the lending, he adds, will come through wholesale funding lines from banks and other large financial institutions.
Despite its relatively young age, Revolut has seen a number of early senior employers move on to new roles in recent years within the fintech and broader tech space. Like a number of its tech peers, such as Deliveroo, N26, Monzo and Klarna, this 'mafia' have become increasingly become founders or early employees at other successful startups or angel investors themselves.
Other angels contributing to the Pillar raise include the founders of WageStream, Peter Briffet and Portman Wills as well as the powerhouse investor and former VP and investor of AirBnB Oliver Jung.