Success story: How Froda Improved Its Risk Decisioning With Open Banking
Froda used Enable Banking’s API to significantly increase the speed and accuracy of its risk checks. This resulted in reduced risk for Froda, instant loan decisions for customers and a fairer, more inclusive small business borrowing environment.
About Froda: Democratising SME Financing
Founded in 2015, Froda is a tech-driven fintech company dedicated to SME lending. Its mission is to democratise access to financing for small and medium-sized businesses, providing them with growth opportunities similar to those of large corporations.
By digitising the lending process and leveraging data-driven insights and machine learning, Froda ensures objective, precise and fair assessments.
This innovative approach supports a diverse range of entrepreneurs across Sweden, Finland, Norway, Denmark, Germany, Ireland, and Great Britain. Froda's fully automated system delivers real-time credit decisions, enabling small businesses to access the funds they need within seconds.
The Problem: Accessing Accurate Transactional Data
“Transactional data is vital for us to understand a business’s historical cash flow and other relevant behaviours that can affect the credit decision. We can see if a business has other loans or if there are any risky behaviours like gambling. This rich data enables us to enhance our credit scoring, especially for small businesses.” Oliver Mohseni Skoglund, Co-Founder, Froda
Small businesses, which are the backbone of local economies, have historically struggled to secure external financing. Traditional banks, with their lengthy processes and reliance on outdated methods, often fail to meet the needs of SMEs.
Froda needed an Open Banking solution that could provide transactional data to make fair and objective credit decisions.
The challenge was finding an Open Banking partner that excelled at business accounts, rather than just consumer accounts.
The Solution: An Open Banking API That Excels at Business Accounts
Froda's search led them to Enable Banking, a provider with a strong focus on business accounts. Enable Banking’s extensive coverage in the Nordics and Germany, and their commitment to business accounts, made them the perfect partner.
By leveraging Enable Banking’s data, Froda gained seamless access to comprehensive transactional data, crucial for their data-driven credit scoring model.
This partnership allows Froda to accurately assess business performance and predict future growth, ensuring credit decisions are based solely on a company’s actual financial health. Froda eliminated subjective evaluations, promoting a fair and inclusive lending process.
The Outcome: Faster, More Accurate Risk Decisioning
“The integration with Enable Banking has been remarkably smooth and efficient, thanks to their responsive and agile support. Customers can log into Froda's portal, see their available credit within seconds, and make informed decisions about their financing needs.” Oliver Mohseni Skoglund, Co-Founder, Froda
Froda’s collaboration with Enable Banking has several powerful outcomes:
Consent-based, transparent data sharing for customers during the lending process.
Fairer and more objective credit decisions, irrespective of gender, ethnicity, or background.
Reduction in risk for Froda due to access to real-time, comprehensive access to transactional data from business accounts.
Faster approval times for customers, with loan statuses available in seconds.
A more inclusive and dynamic borrowing landscape for small business in line with Froda’s mission.
The Process: Data Integration and Machine Learning for Instant Loan Decisions
”Integrating Enable Banking into our system was seamless, and their data is reliable and essential. Our tech and product teams are thrilled with Enable Banking's responsive support, making our partnership straightforward and rewarding.” Oliver Mohseni Skoglund, Co-Founder, Froda
By partnering with Enable Banking, Froda transformed their lending process.
Here’s how it worked:
Data Integration: Froda integrated Enable Banking’s APIs into their system, allowing them to access detailed transaction data from their SME customers' business accounts. This data provided insights into cash flow, existing loans, and potential risky behaviours, such as gambling, which could impact creditworthiness.
Machine Learning Analysis: With rich transaction data at their disposal, Froda’s machine learning algorithms could analyse and interpret unstructured data. This, combined with traditional credit data from credit bureaus, enabled Froda to create a comprehensive credit profile for each applicant.
Instant Decisions: The seamless integration and analysis meant that Froda could offer instant credit decisions. SMEs could log into Froda’s portal, and within seconds, see their available credit based on real-time data. This speed and transparency were unparalleled compared to traditional banks, which often took weeks to process loan applications.
Enhanced Customer Experience: Froda’s customers benefited from a straightforward, efficient application process. They no longer had to deal with extensive paperwork or wait weeks for a decision. Instead, they could quickly access the funds needed to invest in their growth, knowing that the process was fair and data-driven.
Want to See the Same Results in Your Business? Get in Touch
For other SME lenders looking to enhance their services, Enable Banking offers a compelling solution.
Our dedication to business accounts, extensive regional coverage, and exceptional support make us uniquely capable of meeting the needs of innovative financial institutions like Froda.
If you would like to see how Open Banking can transform your business, get in touch to speak to one of our advisors.
