The need for borrower and lending assessments by businesses has existed since merchants started trading, and the problems experienced by merchants hundreds of years ago echo the problems companies still face today.
Experian emerged during the early days of gathering and analysing information to help other companies know their customers. Today, it’s grown to a global company with 27,000 employees, holding data for 1.3 billion consumers and 163 million businesses.
“Experian helps businesses know their customers and make better business decisions at any touchpoint during the customer lifecycle,” says Bo Rasmussen, Chief Commercial Officer, Northern Europe, at Experian. “Whether it’s data, analytics, software, ID, fraud analysis, compliance, or decision engines, we help businesses and fintechs with our range of solutions.”
“We’re in an exploratory phase at the moment because using generative AI in credit scoring isn’t straightforward,”
Bo Rasmussen, Chief Commercial Officer, Northern Europe, at Experian
The colourful history of credit scoring
Looking back at how “credit scoring” first began, we gain an appreciation of the pain points merchants experienced before the digital age.
In Denmark, the first known record of a “credit report” occurred in 1783, when a Danish merchant politely wrote to a potential customer and asked for more information about their financial circumstances beyond just their “Happiness and Piousness.”
In 1803, a group of tailors in London began sharing information on customers who failed to pay their debts. The verbal data-sharing practice soon grew into a printed monthly circular, which laid the foundation for today’s digital credit scoring systems. These systems, although continuously improving, still face challenges in ensuring that all data is accurate and free from biases..
In the late 19th century in the United States, it was still possible to accumulate large debts, “disappear” overnight, and then rack up further debts in another state. Credit agencies emerged as a potential solution, but their data was fragmented. The same occurs today when companies don’t have access to sufficient customer data across a wide variety of sources—something Experian has excelled at solving.
As technology advanced, so did the ability to collect meaningful, correlated data to reduce the inaccuracies of previous methods. The most significant advancements were the telephone, followed by the computer, the internet, and ML/AI.
154 years of Experian in the Nordics
Experian’s Danish Credit Bureau turns 154 years old on 20 November 2024.
In 1928, the company appointed a woman to its board of directors, working alongside three men. She formed a hardship fund for employees which operated until 2016 when it was transitioned into a new structure. The fund is representative of another long-term goal—Experian’s desire to help consumers with their financial health.
In 1930, Experian began publishing a solvency book in the Nordics, which has now morphed into its quarterly analysis of Nordic startups across industries. Experian also operates the well-known RKI debt register and releases analyses for the register twice a year. Experian’s analytics reports are created to inform the public regarding market trends about the number of individuals and companies registered as bad payers.
Today, Experian in Denmark holds business information for 1.9 million active companies, and RKI data on nearly 400,000 consumers.
Helping consumers
Recognising the devastating effect that poor credit can have on businesses and consumers alike, Experian helps consumers around their financial health.
“We help consumers by enabling our clients to gain a clearer understanding of their customers’ financial situation to reduce overindebtedness and prevent reckless lending,” says Rasmussen.
As part of ensuring consumers’ financial health, Experian’s roadmap includes implementing all aspects of the recently updated EU Consumer Credit Directive (CCD2), which strengthens consumer protections and limits companies from providing credit without adequate credit checks.
CCD2 doesn’t change Experian’s basic ethos, which is to use good, accurate data and analytics to help businesses make more informed decisions.
Investing in modern technologies
Experian has transitioned from a credit bureau into a market leader in data science, analytics and innovative software solutions. The company continuously invests in the latest technologies such as cloud computing, new analytics techniques, machine learning and AI to drive these innovations.
Machine learning and deterministic AI have been part of banking and finance since the 1980s, particularly in the credit-scoring sector. Experian uses proprietary algorithms and tools for this aspect of AI. It also has a dedicated team of data scientists investigating the potentials of generative AI.
“We’re in an exploratory phase at the moment because using generative AI in credit scoring isn’t straightforward,” says Rasmussen. “Using synthetic data that accurately represents real-world data means we are able to develop and test improved scores.”
The company has also found additional potential use for modern iterations of AI—data capture from multiple data sources, and normalisation of that data, which would significantly reduce the manual labour involved in this process.
Experian’s drive to innovate includes acquiring or partnering with companies that will help it achieve this goal. It recently acquired Noitso, which specialises in data science, data acquisition, and decisioning. It also acquired Credit Board, a SaaS platform that streamlines creditworthiness.
The company also acknowledges the strength of partnering with experts and companies in the industry, such as the recent partnership with Subaio. This partnership leverages Subaio’s data-driven engine to analyse recurring payments so that Experian provides even stronger and more accurate credit assessments in Denmark.
Looking back, and looking forward
Companies that need to offer credit today face the same challenges those London merchants faced when whispering gossip and hearsay in each other’s ears in the hopes of avoiding bad debt: The need for accurate, verified, up-to-date credit data.
Experian’s purpose since its inception has been to provide data, analytics expertise, and innovative software to power opportunities across a wide range of industries. By continuously adapting to new technologies, Experian ensures its solutions remain relevant.
