The current credit system relies heavily on outdated third-party data, which only provides a small piece of the puzzle when it comes to evaluating an individual’s financial behavior. Georgina Merhom, founder of SOLO, a first-party data collection and reporting engine, believes that this approach is not only limited but also punitive.
The Limitations of Traditional Credit Bureaus
Traditional credit bureaus are essential in identifying individuals who have failed to pay bills on time. However, relying solely on this information can be misleading and fail to capture the full picture of an individual’s financial behavior. Merhom emphasizes that "if you only follow the money, you can miss out on a lot of signals."
The Need for First-Party Data
SOLO aims to revolutionize the credit system by incorporating user-permissioned data sources, which provide a more comprehensive view of an individual’s financial behavior. These data sources include:
- Bank accounts: Through partnerships with companies like Plaid, Teller, and TrueLayer
- Commerce and payment gateways: Amazon, Shopify, Square, Stripe, and PayPal
- Invoicing/billing systems: QuickBooks and Bill.com
- Customer relationship management platforms
By incorporating these user-permissioned data sources, SOLO replaces the self-reporting process, builds trust between institutions and consumers, and identifies opportunities that would have otherwise been overlooked.
Georgina Merhom’s Background
Merhom’s journey to creating SOLO began in the cybersecurity industry, where she developed and trained algorithms on the dark web to detect illicit activity. This experience taught her the importance of incorporating a wider variety of data and its context to paint a more accurate picture.
Her work at Zivmi, a cross-border payments app in Egypt, further solidified her vision for SOLO. Merhom recognized the need to create a new kind of credit bureau while working with freelancers without bank accounts. She was able to verify their experience level, client ratings, and overall work history through platforms like GitHub and Upwork.
The Competition
While building a better credit bureau or finding new ways to verify data from individuals without a lot of credit is not a new concept, SOLO stands out from the competition in several ways. Companies like Altrois, Kredivo, Bloom.io, and Masa Finance are also working towards creating more accurate and comprehensive credit systems.
Goals for SOLO
Merhom and her team aim to achieve several key goals with SOLO:
- Reduce application processing time: From up to two months to mere minutes
- Decrease costs: By up to 70%
- Increase value per customer
By achieving these goals, Merhom believes that SOLO can revolutionize the credit system and provide a more accurate picture of an individual’s financial behavior.
The Future of Credit
The current credit system is flawed, relying heavily on outdated third-party data. SOLO aims to change this by incorporating user-permissioned data sources and providing a more comprehensive view of an individual’s financial behavior. With its innovative approach, SOLO has the potential to revolutionize the credit system and provide a more accurate picture of an individual’s financial health.
