Introducing our new risk scoring model: Kea

Here at October, we are always finding ways to empower businesses by simplifying and democratizing their funding. Since 2014, we’ve been doing it for SMEs in five countries, becoming the #1 SME lending platform in Europe. October can now lend to micro-businesses instantly from €15,000 to €30,000. This is a game changer for micro-companies, made possible by our new risk scoring model: Kea.

What is Kea?

After Magpie, launched in 2020 to give instant decisions based on companies’ financial statements, Kea is our new Instant Decision model. Micro-companies can now receive a credit offer within seconds. Magpie and Kea models apply machine learning to financial, behavioural and bank information gathered in the 5 countries where October operates. The main difference between Magpie and Kea is the type of data used to score the project, and the category of companies targeted.

While Magpie is based on financial and behavioural data, Kea focuses solely on bank transactions to assess the company’s probability of default. To create this model, millions of bank transactions have been analysed, thanks to PSD2 connexions and automatically extracted bank statements PDFs. Kea is available for French and Italian companies.

Designed to empower micro-businesses

Micro-companies need a simple and flexible solution to finance their projects; only technology can provide it. The traditional approach does not fit their activity: asking for years of financial statements doesn’t make a lot of sense for companies looking primarily at monthly cash flows.

Kea makes it simple: no need to send financial statements or to have a meeting. All we need is to access the bank accounts to analyse the eligibility and send an offer. This way, micro-companies can fully focus on what matters the most: their business.

How does it work?

Freelancers and micro-businesses active for more than a year and with sufficient turnover capacity can now request from €15,000 to €30,000 and automatically get an Instant offer. Kea analyses the borrower’s bank transactions over the past 12 months to generate a credit score. Except for state-guaranteed loans, the duration will be fixed at 24 months, with an interest rate from 6.5% to 9.5%.

Fast and safe decisions

To analyse the banking transactions, October uses a regulated, read-only PSD2 connection to the company’s main bank account. Kea focuses on specifically tailored indicators and raises a flag when it detects distress signals.

For these Instant projects, our analysts do not focus on underwriting but on fraud detection. The robustness of the analysis made by Kea is sufficient to propose automatically an Instant offer. Nevertheless, we are systematically performing antifraud and compliance checks on each projects to propose the safest investment to our lenders. Small tickets loans are a new opportunity for lenders to have access to more projects and diversify even more their portfolio. And to participate to financial inclusivity.

Kea is a breakthrough for lending to small businesses, with Instant decisioning and streamlined scoring. This risk scoring model is part of the modules that are available on October Connect, our neo-lending technology for financial institutions.