UK AI banking startup Abound has secured £500mln of new funding that the company intends to use to expand its client base, invest in tech, and finance loans.
It is tapping into the open banking initiative where fintech companies and other third parties are using data supplied by traditional financial institutions to provide alternative lending services.
In Abound's case, it uses real-time data from customers' bank accounts to manage incomings and outgoings to create credit scores for near-prime customers who might be rejected by lenders because of their lack of credit history.
Formerly known as Fintern, Abound currently provides loans of between £1,000 and £10,000 with repayment periods of up to five years, and says it is on track to loan out £1bn by 2025.
Abound’s chief executive and co-founder Gerald Chappell, a former partner at McKinsey, told Techcrunch the group uses its AI-based risk and lending profiles to perform “financial X-rays” which help Abound “understand true affordability” when it comes to lending.
According to Chappell, Abound has a default rate 70% lower than the UK industrial average.
The latest funding round primarily consists of debt provided by Citi and Waterfall Asset Management, with a smaller portion of equity provided by K3 Ventures, GSR Ventures, and Hambro Perks, following funding rounds raising £32mln and £40mln both last month.
“Abound is delivering a unique product and a differentiated approach which is already proving itself to work for thousands of customers,” said Kuok Meng Xiong, chief executive of K3 Ventures, adding: “We are excited to see Abound’s offer grow in the years ahead.”
As Fintern, the business was founded in 2020 by Chappell and chief operating officer Michelle He, a former director at EY in London.