Crowdz Doubles Down on UK Financial Liability with New FCA Sandbox Test
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Crowdz Doubles Down on UK Financial Liability with New FCA Sandbox Test

By CIOReview | Monday, August 17, 2020
Payson Johnston, President & CEO

Payson Johnston, President & CEO

Invoice financing marketplace Crowdz has announced it has partnered with leading business credit score provider, Wiserfunding, to provide its investors with a new element to its credit risk assessment capabilities, as global economies undertake recovery efforts in the wake of COVID-19.  

FREMONT, CA: Wiserfunding, the new venture from renowned NYU Stern professor Edward Altman, builds upon his famous Z-Score model, using new and innovative technologies for sourcing and processing structured and unstructured data. Wiserfunding SME Z-Score and Probability of Default will deliver up to 95 percent default prediction accuracy for Crowdz receivable financing investors, 20-30 percent higher than other industry standards that rely on manual risk assessments to identify high-risk customers. The score is explicitly tailored for SMEs with revenue between £500K and £200M.

Wiserfunding will join several indicators that comprise Crowdz proprietary SMARTSCORE, delivering the market's most accurate risk assessment, as more small and medium enterprises (SMEs) than ever seek financing.  

The Crowdz SMARTSCORE offers a real-time assessment of the probability of default, payment, and soon, probability of supply, and ESG (Environmental, Social, and Governance) reputational risk.

Crowdz CEO and founder Payson Johnston says, "The UK market is a high priority for Crowdz and this partnership, alongside our participation in an FCA Sandbox test reiterates our focus on building a responsible and impactful presence in the region as we expand."

With more UK businesses seeking additional capital to sustain their businesses, the partnership will safeguard Crowdz investors in offering financial relief to SMEs and support the more extensive economy by reducing the reliance on government or bank funding.

From the beginning of the COVID-19 crisis, Crowdz has seen a 5000 percent increase in business users worldwide. Partnering with Wiserfunding is expected to augment this figure substantially by improving the comprehensiveness of our SMARTSCORE.   

"As an addition to Crowdz SMARTSCORE, the introduction of Wiserfunding will help investors funding Crowdz SME community to better allocate funds, and help SMEs hardest hit by COVID-19, get back on their feet. More broadly, by increasing our capacity to fund more SMEs, this partnership makes the market more efficient, mitigates the risk of an SME credit bubble, and will help to rebuild the economy," he added.

Support for UK businesses during the hardest economic period in decades

The partnership comes as the UK's debt soars to its highest levels since the Second World War, with borrowing surpassing GDP at a record £103.7bn and economic outlooks bleak.

Eighty percent of the UK small to medium enterprises say their revenues are declining due to the pandemic, with one in four concerned about defaulting on loans. Under current conditions, above half of the UK's 5.9 million SMEs would be out of business in less than a year, especially if revenues take a 10-30 percent hit, according to new McKinsey & Co data.

Gabriele Sabato, CEO of Wiserfunding, says, "We are absolutely delighted to be able to support Crowdz in their efforts to fund SMEs growth. By providing our independent, accurate and credible credit risk assessment for SMEs, Crowdz will be able to attract more institutional investors to their platform and ultimately, benefit the UK economy by funding a larger number of SMEs. In these difficult times, SMEs desperately need smart solutions such as the Crowdz platform and we look forward to playing our role in boosting investors' confidence."

The announcement builds on Crowdz and Wiserfunding's ongoing relationships, both members of the COVID-19 Fintech Taskforce, responding to the urgent need for financial support from UK SMEs impacted by the pandemic. The initiative aims to enable banks, alternative lenders, and private debt lenders to digitally deploy funds to businesses during the crisis.

Crowdz will also participate in a test that it is undertaking as part of the FCA's regulatory sandbox. Regulatory sandbox allows firms to test innovative offerings in a live environment.