UTU’s Creditworthiness API will help increase loan volume and decrease default for traditional and DeFi lenders while improving customer experience.

The UTU Creditworthiness API

We’re excited to announce that the UTU Creditworthiness API is now available for integration!

The API will improve the accuracy of credit assessments for financial institutions and decentralized finance (DeFi) platforms globally. If you are in the lending industry, reach out to us here. We will be happy to work together to drive financial inclusion.

Read on to learn about the credit problem we’re solving, how the Creditworthiness API solves it, benefits for lenders and borrowers, and future plans.

What problem is the Creditworthiness API solving?

With the spirited drive for financial inclusion spreading across the globe, banks and financial institutions can no longer rely on traditional methods of determining customer creditworthiness to service the newly banked. Paper records are no longer sufficient to service these borrowers who had been unbanked before mobile money disrupted the financial system, moreso in Africa. In addition, many vibrant small and medium enterprises (SMEs) may not necessarily interact with traditional banking which means that financial institutions like microfinance institutions (MFIs) could be losing out on a market that is experiencing digital transformation. 

Despite the advances in financial inclusion, financial institutions still employ outdated credit scoring methods, subjecting their customers to high interest rates to mitigate risk. Additionally, the need for physical collateral still exists, even as the world moves towards decentralized finance.

UTU’s Creditworthiness API bridges this gap. We recognize that financial transactions are all about trust. When customers trust service providers, their loyalty and patronage grows stronger. Banks and lenders in general can only deliver confidently when they trust that the borrower will be able to pay back. 

How is the Creditworthiness API solving it?

Using machine learning and artificial intelligence, the UTU Creditworthiness API allows institutions to monitor loans and determine creditworthiness of both individuals and businesses by analyzing a variety of user-permissioned data points. These include historical financial information and new repayments that provide the necessary interplay to train models of high accuracy and precision, empowering lenders to make decisions with a high level of confidence.

Lenders can upload historical and other data, allowing the machine learning model to discover and learn from latent patterns in loan repayment that can then be applied to decisions on new applications. Our model continuously analyzes new repayment data to increase accuracy and performance, adapting to evolving borrowing patterns in its prediction. The Creditworthiness API is able to identify trustworthy borrower profiles and those that are at risk of default through this dynamic model.

In addition, the Creditworthiness API will work in conjunction with the M-PESA Parser API to allow clients to easily extract data from their customers’ M-PESA statements, such as name, phone number, and account payment activity. Clients will be able to view this information on a dashboard and incorporate it into the credit scoring model.

You can access the API documentation here. It will be updated continually.

Benefits for lenders and borrowers

Benefits for banks, microfinance institutions and decentralized peer-to-peer (P2P) lending platforms include:

  • Increased loan volumes — Customers will enjoy a better experience with customized, friendly interest rates as the risk of default is mitigated.
  • Decreased default rates — Lenders will be able to assess risk and identify borrowers who have higher potential to pay or default through a one-click, updated, data-driven credit score.
  • Extended reach to customers that lack credit history in new markets — Access to mobile money data for analysis via the M-PESA parser feature business and personal M-PESA statements.

Benefits for borrowers include: 

  • The potential to borrow higher amounts with less collateral.
  • An improved experience from faster service.
  • Lower interest rates. 

Borrowers who use decentralized finance (DeFi) platforms will be able to access undercollateralized loans. The UTU Creditworthiness API leverages on- and off-chain data and social graphs for contextual relevance, providing qualified borrowers with the opportunity to access funding with less collateral.

For borrowers using P2P lending platforms, UTU’s trust infrastructure provides a trustworthy environment that works in tandem with the Creditworthiness API to deliver personalized recommendations. They can choose lenders based on endorsements and previous activity on the platform.

How the Creditworthiness API will work in the future

Further, UTU will build the first socially-powered credit assessment feature through which businesses can leverage social network connections to add more data to credit assessments. This extra layer of trust will differentiate the Creditworthiness API from typical credit scoring systems. P2P platforms that integrate the API will enable lenders and borrowers to see possible social connections and make better transaction choices based on who they know.

In the future, companies plugging into the API can extend their services to reward customers who contribute trustworthy information through tokens at no cost to them. This is powered by the UTU protocol that runs on the blockchain. The protocol will also power the UTU Trust API — the company’s flagship product — which provides companies in the mobility, ecommerce and other sectors with the tools to power contextual customer reviews and endorsements.

Conclusion

We can’t wait to scale the Creditworthiness API to serve more people and bridge the gap between traditional finance, digital banking, and DeFi.

Stay tuned for more information as we keep building more fintech solutions to increase trust across the entire internet.

Interested in learning more about how you can integrate the creditworthiness API into your lending platform? Reach out to us here or email us at [email protected]. We would love to hear from you!


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