CreditLadder Changes Status, Adds Payment Initiation
The British FinTech CreditLadder has been granted Payment Institute status by the Financial Conduct Authority (FCA). From now on, they may initiate payments on behalf of third parties and, as an approved Account Information Service, provide aggregated financial information to their customers. This approval could significantly expand their range of services, while still improving their scoring procedures.
CreditLadder has recently been granted AISP (Account Information Service Provider) and PISP (Payment Initiation Service Provider) status by the FCA, enabling them to aggregate accounts and initiate payments. This initiative has been made possible by the implementation of the 2nd Payment Services Directive, whereby these two statuses were created.
This FinTech will no longer need to rely on their partner TrueLayer to aggregate customers’ accounts, they will display personal financial information through “dashboards”. They will also be able to initiate payments on behalf of third parties: initiating transactions from their customers’ bank account to one of their 2,500 partner real estate agencies for recurring rent payments, for instance. Their previous status did not allow them to place these orders, they were dealt with by their customers.
Once customer consent has been granted, CreditLadder acts as an intermediary ensuring that rent payments are made in a timely manner each month from the bank account to the housing agency. This approval will make it possible for them to enhance their products and services for these agencies, while helping tenants manage and improve their credit score. They will be provided with more efficient and customised dashboards.
Comments – CreditLadder’s ambitions made clear
CreditLadder is now one of only 15 AISP and PISP-registered companies in the UK. These statuses directly result from the implementation of the PSD2 to regulate payment initiation and account information service providers.
This announcement significantly widens the scope of possibilities for CreditLadder. Through these changes, the London-based Fintech may then allow their customers to transfer money to their savings accounts by way of improving their personal finance –as is the case with Self Lender, for instance. Overall, these statuses bring along additional opportunities for credit industry players: they are provided with a wide-ranging view of their customers’ financial health (credit history, risk profile) enabling them to improve their situation. To achieve this goal, they could initiate money transfers between different accounts without having to rely on a financial intermediary. In partnership with CreditLadder, Experian now includes rent payments in their scoring tools: this mechanism contributes to improving borrowers’ overall credit score 80% of the times.