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In this episode Sankaet Pathak, co-founder and CEO of Synapse, and Misha Esipov, co-founder and CEO of Nova Credit discuss democratizing access to cost-effective credit beyond borders. They break down the challenges and explore solutions to taking credit global.
Nova Credit is a fintech that started by solving the problem of financial identity mobility, or helping people that were credit invisible after moving from one country to another. They partner with bureaus like Experian, Equifax, and TransUnion, aggregating the world’s credit reporting systems, giving Nova Credit connectivity into over 20 markets and about two billion consumer credit files from around the world. Then, that information is normalized into one single global standard of a 300-850 FICO range.
The discussion starts off with Sankaet highlighting that Nova Credit is really about credit portability. They further discuss how the lines for issuing credit are blurring, such as where you live and what currencies you decide to bank in – all of these lines are blurring now.
Here are some of the key discussions:
Physical migration will lead to digital migration
When COVID hit, various economic policies took shape across the planet, and we saw an increase in inflation. People weren’t moving around, but they did have the desire to divest local currency, and the USD seemed the most stable. People started to migrate digitally into this ecosystem.
Addressing the regulatory puzzle
How do you think regulators would or should see capabilities like this where people are not physically migrating but digitally migrating? Regulators vary in their stance on a free market. If you believe that global financial services and the globalization of consumer finance will be a free market, then you have to believe that the end state is one where any consumer anywhere in the world should be able to bank and borrow from any financial institution.
Getting confident with identity matching
The first piece of this is, as a lender, how do you know with confidence that the person that you’re lending to is in fact the person they say they are and they are the person whose credit record you’re reviewing? Secondly, how do you satisfy local market regulations around KYC AML for someone who does not have a US identity?
Global Credit already exists
For ultra-high-net-worth individuals who, let’s say, have an account with one of the big London banks but live in Mexico, the bank will figure out a way to underwrite a mortgage. Subsections of the population are already living in that reality. It's just not accessible to the masses yet.
Cross-border credit portability
Credit portability is the idea that if you change your country, whatever you've built in credit history, you’re not leaving behind. To port over your credit history from wherever you’re from and for that information to be seamlessly accessed, transferred, transformed, upgraded, made compliant with US standards and delivered into the decisioning process, that allows someone to go near instantaneously from a no to a yes for credit approval.