A new strategic partnership between Open Finance data and payments platform Belvo and global analytics software company FICO aims to expand access to credit across Latin America.
Together, Belvo and FICO are developing an “interpretable and explainable” machine learning model that will provide a score based on consumer-permissioned transaction-level data.
The ‘Belvo Open Finance Score’, which is developed by FICO’s AI innovation and development team using AI techniques such as interpretable neural networks, is expected to go live in Brazil later this year.
It will work by producing a credit risk score based on Open Finance transactions from different types of accounts, including credit, debit, current accounts, savings and investment, entirely permissioned by the customer and securely processed through Belvo’s Open Finance infrastructure.
“The speed of change in consumers’ behaviour since the pandemic is astonishing, and we have an opportunity to bring new insights to lending decisions,” said Albert Morales, Belvo’s general manager in Brazil.
“Open Finance data provides a much wider and updated picture of the circumstances of people and companies.”
He added: “Together with FICO, we are capturing the predictive value from all this data and summarizing it in a score that will help financial institutions make more accurate risk assessments and identify creditworthy people they may be missing today.”
Belvo recently made its first acquisition, buying Skilopay, a Brazilian payment institution specializing in payment services through Pix.
Earlier, in March, Belvo launched an Open Finance payment initiation solution in Brazil to improve the user experience for companies accepting Pix payments, after receiving authorisation from the Central Bank of Brazil to operate as a payment transaction initiator in September 2022.
Alexandre Graff, FICO’s senior vice president of global partnerships and alliances, added that Open Finance data has the potential to be “a major component” of a country’s financial and economic ecosystem, as seen in Europe.
“The solution we are developing with Belvo can be a game-changer for increased financial inclusion, and advances FICO’s mission to help more people get access to credit, as expressed in our Global Financial Inclusion initiative,” said Graff.