How Cheq Uses Nordigen to Foster Responsible Lending in Australia
VC backed Fintech Cheq is disrupting the predatory payday lending industry by providing people with instant access to their earned wages on demand. The Australian Fintech is fostering responsible lending practices, offering affordable short-term loans with a fixed fee. The app uses Nordigen's transaction categorisation engine to help consumers be on top of their finances.
According to Cheq, over 2.5m Australians are financially stressed, with 70% living pay-check to pay-check, and 60% with no savings plan or $1,000 in their savings account. This has increased reliance on predatory payday lenders who are known to take advantage of the situation, charging anywhere from 50% - 150% in interest and fees for loans written.
Open banking is set to roll out in Australia by February 2020. Fintechs like Cheq are already capitalising on the market-driven demand for fair lending. The company offers its consumers small short term loans with a quick payback period of 7-10 days for a fixed fee of 5% with no interest or hidden costs. The app offers consumers free integrated budgeting and spending tools, all powered by our transaction categorisation engine.
Cheq uses an innovative approach for assessing their applicant creditworthiness. Next to geo-tracking and KYC checks, the fintech is also using Nordigen's income verification technology. This allows Cheq to instantly verify their applicant’s income for more accurate credit assessment decisions. Our solution helps credit specialists detect income sources, their regularity, stability and trend.
"As the cost of living is increasing and disposable income is decreasing, average Australian households have struggled to keep afloat, leading to an increased reliance on payday loans, with lenders charging up to 150% in interest and escalating fees. At Cheq, we aim to disrupt this consumer lending model, by creating a new way, a sustainable model that offers consumers with a responsible alternative to payday loans," says co-founder, CEO Tarek Ayoub.
"Early-adopters and innovators in Australia have realised that they can accelerate their development in the domestic market by leveraging expertise from Europe, the most competitive and advanced open-banking economy in the world. It is difficult to see how players who chose to go it alone will be able to compete with those who bootstrap with European partnerships," says Nordigen CTO Jake Sebatian-Jones.
Cheq is disrupting the payday lending industry by enabling users to get paid on the same day they work, charging them a nominal fixed fee to do so, with no interest charged or hidden costs. The app also provides users with free budgeting and spending tools to help increase financial wellness.