Sydney, Australia – The Australian arm of small business lending company OnDeck has launched a new credit scoring innovation to allow greater access for small and medium enterprises (SMEs) in Australia on their credit services.
Called as ‘KOALA Score™’ formerly as Key Online Australian Lending Algorithm, is developed by OnDeck and uses a sophisticated blend of credit algorithms and statistical techniques in combination with data from credit reporting agencies illion and Equifax, to support more granular credit risk assessment for Australian SME lending.
KOALA gives OnDeck the ability to analyze the personal credit scores of business owners, which is a unique feature of the new credit model. This is a plus for newer enterprises, sole traders, and partnerships, which typically do not have the substantial volume of commercial data required by traditional lenders.
“Previously our credit scoring was very commercial credit score driven, but KOALA uses a mix of commercial and consumer credit history plus cash flow, to build a more holistic risk profile,” said Cameron Poolman, CEO at OnDeck Australia.
KOALA was first piloted on a consumer test last March 2021, where it recorded 5% of customers who received loan offers that extended the option of spreading the repayments over longer terms if desired. Furthermore, OnDeck also recorded an 11% increase in approvals for business loans up to $250,000, with the enhanced credit risk assessment provided by KOALA increasing confidence in loan amounts and duration.
“Moreover, the KOALA risk assessment model has been tailored to the Australian small business customer, and this granular insight potentially gives SMEs more access to funding they need, coupled with an uptick in lending limits,” Poolman added.
OnDeck also provides a ‘Know Your Score’ service to SMEs, allowing small businesses to check their Equifax business credit score online at no cost. Since launching the service in 2016, almost 20,000 small business owners have discovered their business credit score.
“We have now backed this up with KOALA, using the quieter environment of 2020 to drive innovation in our business. The development of KOALA – and its tailoring to the Australian small business landscape, highlights our commitment to the SME sector. KOALA is significantly more granular because it uses a greater range of data sources and ultimately enables us to offer loans to more Australian businesses, at a time when they really need it,” Poolman concluded.