How US fintech Braviant Holdings is helping underbanked consumers take control of their financial lives
There are around 50 million adults in the US who are underbanked. These are people who have access to mainstream checking accounts, but who cannot access other financial services such as credit from traditional providers.
Braviant is a rapidly growing fintech based in Chicago that is addressing this large but underserved market with a suite of innovative credit products. The company, founded in 2014, is headed by Stephanie Klein, who has an impressive set of awards to her name. In 2018, Stephanie was selected as a member of Crain’s 40 under 40 and named as a finalist for LendIt’s 2018 Fintech Woman of the Year award. In 2020, she was a finalist in the Outstanding Tech CEO category at the 13th annual Momentum Awards, hosted by 1871 and the Illinois Technology Association.
Braviant is emerging as a leader in providing simple, transparent personal loans. Getting a loan from a bank or a credit card company generally requires a good or excellent credit rating. But for a variety of reasons, many people have a poor credit score. They may have made a few mistakes managing their bills when they were younger, or their credit may have been impacted by an unexpected event such as a layoff, a large medical bill or a divorce. For these people, the only alternative to overdrafting their checking account is often a payday loan. This can be expensive, and borrowers usually have to repay these loans in a matter of a few short weeks, propelling them further into a cycle of debt.
Data and technology combine to enable better decisions
The credit Braviant provides is very different. There are no origination or prepayment fees, and loans can be repaid in small, affordable installments over a longer timeframe of four to 24 months. Whereas a payday loan repayment may wipe out 40 to 80 per cent of a borrower’s income, a typical instalment payment toward a Braviant personal loan requires just five to 15 per cent of a borrower’s net paycheck.
Tapping into this large underserved market has enabled Braviant to grow rapidly – it was included in the Inc 5000 list of the fastest-growing private companies in the US and Deloitte’s Technology Fast 500 list of the fastest-growing technology companies in the US in both 2019 and 2020.
The company has achieved this growth by combining cutting-edge technology with a willingness to evaluate non-traditional sources of data. Banks generally rely on FICO scores to assess creditworthiness. Braviant supplements the traditional credit data that determines a consumer’s FICO score with many other sources, including bank transaction history, to better understand a potential borrower’s true ability and willingness to repay. Because Braviant’s models are much more accurate at predicting the likelihood of default than traditional banking models, it can approve borrowers whom others would decline.
Better information delivers a fairer product
Braviant’s proprietary underwriting algorithms do a better job than a traditional credit score at weeding out customers who don’t have the ability or willingness to repay. Because of this, it can profitably serve credit-challenged consumers at lower interest rates: Braviant products can be as much as 50 to 75 per cent less expensive than payday loans or other products aimed at the underbanked. And while it is true that Braviant’s loans are not as cheap as mainstream products, returning customers can graduate to lower rates over time on Braviant’s “Path to Prime®”.
This approach is generating a big demand: Braviant has provided credit to nearly 250,000 people so far. More than 75 per cent of these are borrowing to cover an unexpected expense because they are living paycheck to paycheck. And given that a third of Americans can’t come up with $2,000 to cover an emergency expense, there is a staggering need for continued access to credit in this market.
Ethical approach fuels employee engagement
Braviant’s fair, transparent approach to lending is reflected the company’s internal culture. It is seen to be a great place to work, with friendly colleagues and an accessible leadership team.
Because it is a small company, Braviant’s employees are offered broad roles with a lot of opportunity to learn and make an impact. People are encouraged to advance their careers, and some have gone from associate to director in less than three years. This approach to employee welfare and development has been recognised by several awards, including American Banker’s Best Place to Work in Fintech, Built In Chicago’s Best Places to Work, and Crain’s Chicago Best Places to Work.
Driving the evolution of the credit industry
Braviant is clearly operating in a market with enormous potential. It has built a sustainable and scalable business model powered by technology, data and machine learning. And in keeping with its mission to help the underbanked access more affordable credit, Braviant is now outsourcing its end-to-end digital loan origination and servicing platform to the mainstream banking industry.
Braviant is driven by a vision that involves rehabilitating the underbanked so they can graduate to prime credit. By offering small-dollar loans to people with less than perfect credit, Braviant is breaking down credit barriers for non-prime consumers. And by sharing its methodologies with mainstream banks, it is expanding the market and further driving down the cost of credit for middle America.
Ultimately these two strategies will empower more consumers to access fair credit products from reputable companies. Braviant’s commitment to helping its customers take control of their financial lives and achieve its mission of “The Path to Prime®” is what makes this rapidly growing Chicago fintech such an extraordinary company.
written by Jeremy Swinfen-Green for Braviant Holdings