It all started with a cold LinkedIn message back in 2016. The co-founder of the (then) tiny startup Nova Credit, Nicky Goulimis, reached out to an executive at American Express to discuss a potential partnership. It was an audacious move but one that, three years later, has paid tremendous dividends for the company.
First, some background. Nova Credit is an award-winning startup (they were the 2017 PitchIt @ LendIt winner) trying to solve what has been an intractable problem. New immigrants, no matter how great their credit was in their home country, are treated like subprime borrowers with no credit history when applying for credit in this country. In today’s interconnected world this is just crazy.
I lived this problem firsthand when I first moved to this country many years ago. So, did the co-founders of Nova Credit and they decided to do something about it. I spoke with Nicky Goulimis, their COO, yesterday to find out how they were able to win over American Express and establish this groundbreaking new partnership.
After that initial message Nova Credit found a receptive audience in American Express. Nicky said, “They immediately grasped what we were trying to do. Our vision of creating a world beyond borders aligns with American Express’s promise to back its cardmembers, wherever they might hail from.” American Express recognized right away that this was a pain point for many potential American Express customers who were prime consumers back in their home country.
How the Partnership Will Work
Nova Credit has spent the last several years building connections to credit bureaus all over the world. They have also worked to analyze this international credit bureau data and translate it to a U.S.-equivalent score. This allows consumers who are new to the U.S. to use their established credit history to access products for which they might otherwise be denied. The company has access to credit bureau data for nine countries, and is live with five countries for American Express: Australia, Canada, India, Mexico and the United Kingdom with plans to add additional countries over time.
This is all done in real time as applicants give permission for American Express to pull their foreign credit report as part of the credit card application process. American Express takes this new data into consideration in their underwriting process and can often provide an instant decision back to the applicant. And they can approve customers they would never be able to without this international data.
When I asked Nicky what the biggest challenge has been in getting this over the finish line she said, “In financial services no one wants to be first. Everyone wants to be a follower. We are essentially serving a new segment with a new dataset, but American Express saw right away the potential of our technology.”
They launched a pilot program in 2018 and are now live with personal credit card applications for American Express. While Nicky would not share any details of the economics of this deal she did say that American Express have licensed the technology from Nova Credit, that incentives are aligned and they plan to expand the partnership to other countries that Nova Credit supports in the near future.
As I said this is a huge problem for millions of people coming to this country and I have been following the progress of Nova Credit with a keen interest. But when I read the news last week I have to admit I was a little surprised that it is American Express who is their big new partner. It is a tribute to the company they have built at Nova Credit that one of the world’s largest global financial services firms felt comfortable risking their reputation with a young fintech startup.
I am looking forward to the day when our credit history can move with us freely wherever we happen to live. Data knows no boundaries after all and we can take our email history, social media data, photos and so much more across national boundaries. This partnership between American Express and Nova Credit is a great first step in this direction.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.