In November, we announced that LendingMetrics had partnered with community lender Fair For You and EML Payments as part of a challenge aimed at making credit more accessible and affordable. The Affordable Credit Challenge, run by Nesta Challenges in partnership with HM Treasury, encourages fintech innovators to partner with community lenders and widen access to responsible, affordable credit.

We’re now delighted to publicise that LendingMetrics is involved in one of three winning partnerships between community lenders and fintechs that have secured cash prizes of £200,000 for developing innovative solutions that make credit more accessible and affordable, particularly for the most vulnerable. Our partnership with ethical lender Fair For You aims to make affordable credit more available to those who need it by offering a loan facility to provide buffer credit specifically for an additional frozen food shop in school holidays, when low income households often use high cost short term credit to cover spikes in grocery costs when children do not have access to free or subsidised school meals.

Fair For You have been utilising LendingMetrics’ portfolio of products and solutions to better understand each applicant and their suitability for the loan. In particular, they have used our multi-award-winning Auto Decision Platform (ADP) to make automated credit risk decisions, which is instrumental in funding small, short-terms loans. In addition, their implementation of OpenBankVision allows Fair For You to gain valuable insight into patterns and trends in income and expenditure, to ensure that affordability – one of the key topics in our last issue of Metrics Monthly – is measured accurately.

About the partnership, Neil Williams, Chief Technology Officer at LendingMetrics, said: “We’re really pleased for the opportunity to continue our work alongside Fair For You. Research has shown that many families are facing financial struggles, particularly during the school holidays, and it’s important that there is a way for these families to find an affordable way to borrow money. Fair For You’s ideas will be another step towards providing affordable credit to those who need it.”

Fair For You, LendingMetrics and EML Payments’ partnership was announced as a finalist for the challenge in November and the organisations have since been working closely to pilot a trial of the scheme with a leading supermarket. Along with an initial £150,000 grant, the six finalists were also supported by Nesta Challenges and HM Treasury to develop their solutions with non-financial assistance such as networking events and legal support. The Nesta judging panel then chose three Prize winners with a forward-looking judgement, taking into account process achieved by the partnerships during the challenge.

Joanna Elson OBE, CEO of Money Advice Trust, and chair of the Affordable Credit Challenge judging panel, said: “There is a huge need for affordable credit, and we know that technology can help credit unions and others to both reach people who need it and provide the kind of service that mainstream financial institutions offer. The panel was really impressed by all the finalists - and we're looking forward to seeing the results of these exciting partnerships.”

Nesta Challenges uses challenge prizes to stimulate innovative solutions to some of the biggest challenges we face. Challenge prizes are a simple but powerful idea. A problem or opportunity is identified, the challenge is publicised and rewards are offered to those who can deliver the best solutions. Over 8 million people in the UK use credit to pay for everyday household expenses, and many of them struggle to access fair, affordable credit. 82% think more needs to be done to ensure there are alternatives to high-cost lenders, and Fair For You’s idea aims to do this by easing financial pressure in low income families brought on by school holidays, when there is a spike in the use of high cost short term credit and foodbanks.

Chris Gorst, Head of Better Markets at Nesta Challenges, said: “The three winning partnerships are great examples of how technology can remove some of the barriers that currently prevent community lenders widening access to affordable and fair credit. Social lenders haven’t historically been able to compete with high-cost alternatives on speed or reach and uniting with fintechs addresses this issue. As these partnerships are becoming a reality, I believe we will see the beginning of a transformation in the personal lending market to support those who need it most.”

Angela Clements, CEO of Fair for You, said: “Fair for You has been considering for some time how to provide small amounts of credit that would alleviate the food poverty experienced by lower income families during school holidays, when school dinners are not available, and childcare costs rise making vulnerable households turn to high cost credit or food banks to support their grocery budget. This requires us to find effective ways of providing small amounts of credit for a freezer food shop with flexible weekly payments, mirroring the solution we have developed for other essentials.“