Aneesh Varma, Founder and CEO of Aire talks about his personal mission to find a ‘better way’ to deal with decisions around credit and creditworthiness and how Aire staffers are encouraged to enter ‘the uncomfortable forest’.
What is Aire – what problem are you solving?
Aire started with a simple purpose. For me, it was a personal mission: how do I make my problem, which I believe is also a problem shared by millions and perhaps billions of people, solvable. Working at J.P. Morgan in my twenties, I relocated to London from New York. Despite a healthy credit record in the US, this didn’t translate in the UK and I found accessing credit as a migrant, impossible. It turned out my experience was pretty common: eight million in the UK, a further 60 million people in the US and billions around the world miss out on the credit they deserve due to our current credit scoring methods.
This happens because credit decisions are made by lenders using largely historical bureau data. That’s really powerful, but it misses a key component – and that’s around context. An understanding of the individual circumstances around our financial lives is crucial when it comes to making credit decisions wisely. The new ways we live, and work, are adding to this problem: freelancers, the self-employed, the gig economy, for example, all contribute to lenders struggling to score us appropriately. So if you’ve grown up abroad, you’re just starting out or you paid off your mortgage years ago, you won’t have the credit footprint you might expect and that can make you invisible to lenders, denying you access to credit or forcing you towards higher cost financial products. This isn’t the consumer’s fault – it’s a failure of the system. Our mission at Aire is about solving this by giving people the chance to tell us about themselves, filling the credit gap that historical bureau data leaves behind.
Is your model just a case of re-defining the criteria for credit worthiness or analysing existing data in a better way?
In fact, it’s neither. Every lender will have a slightly different scorecard and set of metrics they use to assess the creditworthiness of their customers: different risk appetites, different lending strategies – Aire doesn’t get involved in that. Instead, we complement the historical data that lenders have already collected on a credit applicant from the bureau with entirely new data, gathered directly from the consumer at the point of credit application. To do this, we integrate with the lender’s decision-making processes, creating a seamless user experience that provides insight back to the lender, at scale and in real-time. We use advanced machine learning techniques to interrogate this data, validating it against our existing models to provide powerful insights back to the lender. It’s this combination that makes our proposition at Aire pretty unique.
To do this, we’ve designed a really simple, online experience that takes just a few minutes for consumers: we call this the IVI, or ‘Interactive Virtual Interview’. It allows you to take part in the experience seamlessly, on your phone, tablet or laptop so it doesn’t feel like unnecessary friction to take part in. Collectively, this data offers lenders a really rich combination of insights. So to answer your question, we’re not analysing old data in a new way, we’re analysing new data in a new way, harnessing the power of technology to benefit both lenders and consumers during the credit process.
What is the ‘uncomfortable forest’ – how do you encourage your employees to walk in one?
At Aire, our culture and values are entirely fundamental to the way we operate. When I started Aire, I was really keen to get the foundations of the business right. Each of our employees make hundreds of decisions a day that impact the business – the way we can help guide these as we scale is by empowering each of them with a set of values that we, as a company, live by. One of these encourages all of us to ‘enter the uncomfortable forest’ and this is fundamentally focused around integrity and grit. At Aire we’re not about the faster, easier, cheaper path – instead we encourage all our employees to not be afraid to take the hard path, even if it takes more time. And this we summarise in the phrase ‘enter the uncomfortable forest.’
Aire expanded into the US last year – how is that going?
Financial exclusion exists across the world, not just the UK, and so we’ve always thought of ourselves as having global reach. The next sensible step for Aire was therefore to expand into the US – but you have to be patient and mindful about how you do this. Practically, there are a lot of overlaps between the UK and the US credit market yet there are also significant differences, for example, subtle nuances in behaviour and in customer expectations. More importantly, over the last few months the US regulatory scene has started opening up when it comes to thinking about the alternative forms of data the regulator is open to considering. So we’re currently building out our infrastructure and operations in the US, laying the foundations for us to flourish in this space. It’s a massive market and it’s waiting for something like Aire.
We here at FinTECHTalents like to listen to a good song and enjoy a refreshing drink. Would you be able to add to our playlist and our extensive bar menu? Give us a great song to listen to AND tell us your favourite tipple .
I lived in Brazil for a while so it has to be a refreshing Caipirinha – and for your playlist, anything from U2, but if I had to pick one, ‘City of Blinding Lights.’