Stakeholders | 14/10/21

We are always looking for innovation and to keep members updated on how this might generate opportunities. The CCTA was interested to speak to a new company that is looking to extend access to credit to students seeking to fund their education.

ProGrad was co-founded by Marco Logiudice and Ethan Fraenkel, two recent graduates. The idea started when they were both looking to get access to funding for their postgraduate degrees. Marco studied Economics and Finance at Cambridge, while Ethan studied Computer Science at UCL.

Prior to starting their postgraduate degrees, both of them had a return offer from a company they had interned at, yet could not find access to funding from most lenders and were forced to borrow money at high cost from different sources. This is why they co-founded ProGrad: to pioneer financial inclusion for students and Gen Z.

Students and recent graduates find it challenging to access funding from lenders because of two main reasons, a lack of financial past which makes it difficult to credit score them and a lack of significant income, making it hard to assess whether they can afford credit. This means that currently lenders miss out on an annual £8bn worth of lending across students and Gen Z which translates into a £56bn customer lifetime value.

ProGrad explains that they created a twofold solution to tackle these issues, an innovative way to credit score young people through open banking (transactional data) which they say allows them to identify patterns in customers’ spending before scoring them with a probability of default.

Secondly, to tackle the affordability problem, ProGrad created a solution to predict with high accuracy the earnings of students up to five years post-graduation. The aim being to give lenders a clear picture of a customer’s risk profile in order to underwrite loans in a better way.

ProGrad believes that lenders might be able to win profitable market share through a disruptive technology that identifies younger customers’ future earnings. Established lenders can protect and grow their market share, and challengers can bring a differentiated student lending proposition to market.

Through its AI-enabled and explainable credit scoring technology, ProGrad goes beyond simple credit history and provides financial institutions with a clear picture of a younger person’s potential. The use of a unique algorithm incorporating future earnings projections aims to enable lenders to underwrite low-cost, sustainable financing.

ProGrad joined the 2021 Techstars programme in London to accelerate their growth. They are part of the NatWest Fintech Accelerator programme and also joined the FCA innovation hub. ProGrad recently secured their pre-seed funding round, raising £620K from various angel investors in the UK. Among them: senior people inside Santander, Man Group, HIG, Bain Capital and other successful angel investors. This funding will enable ProGrad to launch in coming months with lending partnerships they recently closed.

Stakeholder Article