Abound, a U.K.-based consumer lending service, has raised £500 million ($601 million) in a big fundraise to fuel its own open banking-based business. The startup will use the funds to finance loans, bring more customers to its platform and invest in its technology, which combines open banking data and machine learning algorithms to build what Abound believes is a better “credit score” for applicants.
Abound’s technology uses bank transaction data to build its AI-based risk and lending profiles, which the company describes as “financial X-rays”. These profiles help Abound “understand true affordability” when it comes to loans. In addition to its direct-to-consumer offer in the U.K., Abound plans to expand as a B2B service in Europe, which has been building out its own open banking framework, PSD2.
READ ALSO:
Google Progresses Toward Its Goal of Building an AI Language Model Supporting 1,000 Languages
Google Drive, Docs, Sheets, and Slides Get Updated UI to Simplify User Experience
Vertiv Launches Chilled Water Thermal Wall for High-Density Data Centers in EMEA
Abound has seen a surge of interest since launching in 2020. Its service is based on loans of between £1,000 and £10,000, with repayment options extending up to five years, although average repayments have been 2.5-3 years. Interest rates the company guarantees are lower than those offered by banks (currently they are 24.8% APR). The company has been growing on average 30% month-on-month and has issued loans to more than 150,000 customers to date. It says it is on track to loan out £1 billion ($1.2 billion) by 2025.
The reason for the big sum raised here is that Abound has been seeing a lot of activity around open banking. Its rise comes at the same time that we’re are seeing a lot more activity around open banking. Last year, Visa acquired open banking developer Tink, which provides API rails for thousands of banks, for more than $2 billion. Another major rails provider, TrueLayer, last raised at over a $1 billion valuation (granted that was back in 2021…). Meanwhile, Token.io and Vyne are, similar to Abound, examples of startups building more specific applications on open banking standards (respectively person-to-person payments and merchant services).
Abound’s new funding includes both debt and equity, with Citi plus clients of Waterfall Asset Management providing the debt portion and K3 Ventures, GSR Ventures and Hambro Perks providing equity. The vast majority of the $601 million here is debt, which will be used for lending; the smaller equity part will be used for investing in the business itself. Abound is not disclosing valuation, but for some context, the startup, previously known as Fintern.AI (which is technically still the parent company’s name), had previously raised just under $11 million in equity and around $60 million for loaning.
