Many of London’s burgeoning fintech startups — from online wealth manager Nutmeg to ‘micro savings’ bots Plum and Chip — are focussed on savings and investments by making it easier and more competitive to put money aside for a rainy day. However, one startup, quietly backed by Index Ventures and JamJar Investments in late 2015, is tackling financial health from a different and more immediate angle: debt.
Founded by Matthew Ford, who was previously Head of Acquisitions for OnTrees, a personal finance app that exited to MoneySuperMarket in 2014, Pariti is a mobile app that helps you keep an eye on your spending and, crucially, tracks how much you are paying out servicing existing debt, such as overdrafts or credit cards. It then suggest changes you can make to pay off that debt quicker.
“We connect to your existing banks and credit cards to analyse your financial standing and calculate whether you can save on your debts,” says Ford. “Our clever algorithms forecast upcoming income and bills to calculate what’s left to spend, save and pay off debt”.
Key to this — and where the app’s ‘get yourself out of debt quicker’ mission really comes into focus — is that, where suitable, Pariti lets you apply for a consolidation loan right within the app. “We’ve partnered with Zopa to offer low cost consolidation loans for users who can benefit,” explains Ford. “Users can borrow up to £25,000 at rates as low as 3.5% APR, and can apply in less than three minutes all through the Pariti app”.
It should be said, however, that Pariti isn’t just a way of creating a pipeline of prospective people for its partner lenders to lend to, but is founded on the premise that a lot of consumer debt is opaque and too many people aren’t aware of the true cost of the money they’ve — sometimes inadvertently — borrowed.
The startup claims that in the U.K. alone, one in five people are deemed over-indebted, and a third of people are only able to pay off the minimum balance on their cards each month.
To address this head on, Pariti’s newly rolled out feature calculates how much a user’s debt (credit cards and overdrafts) are really costing them.
“Through their transactional data, we spot all fees and charges to show what is the real monthly cost of their debt,” says the startup’s founder. “Based on that data, we calculate how much users would be able to save every month if they were to replace that debt through a loan”.
Another aspect of consumer debt that Pariti wants to bring greater transparency to is the humble (and creaking) credit score.
By giving the app read-only access to your bank account and credit card transactional data, Pariti gets a pretty good picture of your financial health and should be able to create a more accurate and up to date credit rating, which in turn can be used as leverage to apply for cheaper credit. Again, the end goal is the same: to help you become debt-free quicker.
“With a near real-time view of a user’s financial standing, and our own proprietary assessment approach, Pariti can help lending partners get a much more accurate picture of consumer suitability, affordability and credit worthiness, and users can engage and improve their situation more transparently,” adds Ford.