This episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Sanjoy Malik, chairman and CEO of Urjanet.
PaymentsJournal:
Sanjoy, thank you so much for joining me on today’s episode. To start, let’s give our audience a little bit of an overview about your company, Urjanet.
Sanjoy Malik:
Yes, thank you. Urjanet is a utility data aggregator. We are connected to close to 7000 different electricity, gas, water, waste, and telecom utilities, and we provide information and data from these utilities to our customers, who may use it in the context of businesses or consumers. Our data is all permission-based and qualifies to comply with things like CCPA, GDPR, etc.
PaymentsJournal:
Excellent, thank you for that overview. Well, we’re here at Money20/20. Did your organization have any big announcements coming out of this event?
Malik:
Yes, we announced a deal with LevelCredit, LevelCredit as a data furniture that is going to combine alternative utility data from Urjanet along with the ranked data that they already collect. It is a data furnisher to many financial institutions and credit rating agencies, so we are very excited about working with LevelCredit and having it use our data. It is going to integrate very closely with our APIs and will have access to millions of consumers.
PaymentsJournal:
I’d love to get to a little bit more of the brass tacks of that partnership there. Why specifically did Urjanet decide to partner with LevelCredit, and what will this new partnership really enable for both organizations?
Malik:
So, LevelCredit is one of the leaders in providing the kind of data that it do, and it is not one not for many partners. Our data is being used by many different businesses and partnerships. We have partnerships with many different types of companies, including folks that provide data for credit and lending, for ID verification, for processing payments, etc., and LevelCredit happens to be a leader in that space. It is the primary and one of the leading providers of rent information, so combining rent with utility data makes a lot of sense and it has a richer set of data that it can then provide to agencies are lending institutions.
PaymentsJournal:
Wonderful. Now, I’d love to hear your definition of alternative data, as we’re talking a lot about it here. Also, when we use alternative data, how much is it actually increasing consumers’ credit scores?
Malik:
Yes, that’s interesting. There isn’t really a line that can be drawn between alternative data and non-alternative data. Alternative data is just a term used for data that is in addition to the traditional data sets used in financial services. The traditional data sets might come from your bank account, it might be your checking account balances, your compensation, your network, things like that, that are traditionally used to make credit decisions. Alternative data goes beyond that. It may include utility data, rent information, other types of payments you make, or other types of credit history that you might have, which are not included in the traditional data set. This is quite interesting, especially for certain categories of consumers. These are consumers that have thin-files, or don’t have a lot of credit history. This may include younger people who are just entering the job market, it may include immigrants or people that have gone to non-traditional sources for loans: the payday lenders, etc. 30-40% of consumers in the U.S. fall into this category, and some reporting has been done related to use of this data. What we can say is that if you have two years of payment history on your utility account, you could potentially increase your credit score from 600 to 670, which is very meaningful for somebody who’s trying to get a loan or mortgage. And of course, it represents a great additional business opportunity for the lending institution.
PaymentsJournal:
Excellent. Thank you for that. Now, for our last question here, I’d love to get a sense of what other companies you’ve worked or partnered with to help the underbanked or thin-file consumers and businesses build their credit?
Malik:
Yes, so we have worked with many different companies and I can speak about a few of them. We are working with lending institutions. We have announced our partnership with Equifax, which is one of the leading credit rating agencies. We are working with smaller credit rating agencies. An example of that is eCredable. All of these companies and businesses are providing credit risk assessment to lenders and banks and including alternative data. Including utility data helps to address the needs of the folks that are not part of the financial ecosystem. These are the folks that I mentioned before, that may not have credit history or enough data to build a credit history. Our data really helps with that. One of the things that has also happened is that the regulatory agencies like the CFPB have come up with recommendations. What they recommended is that alternative data is a good thing and should be used to improve financial inclusion. This, again, represents a big opportunity for individuals that can benefit from this, but is also a huge opportunity for the businesses providing financial services that are providing the mortgages and loans.
PaymentsJournal:
Thank you, Sanjoy, for speaking with me about your Urjanet and alternative data. I hope to have you back on the podcast soon.
Malik:
Thank you so much.