Why the Future of Lending Is Moving Beyond Credit Scores

So when we look at the snapshot of consumer credit in America, we see a high debt, high interest environment showing signs of growing strain, especially among lower and middle income households.

Now the New York Fed data showing us that household debt stands at a whopping $18.8 trillion while total consumer credit card debt fluctuates at around $1.25 trillion.

So joining me to discuss this and more is Christy Kim, CEO of Tomo Credit.

Christy, thank you so much for joining us today.

Thank you for having me.

So Christie, you know what it's like to be denied credit opportunities and to have poor credit.

So take us through the reasons why Americans either get denied outright or approved for less credit.

Than required.

And what do those challenges look like?

Yeah, so I'm originally from Seoul, South Korea, so when I came to the US, I had no credit score, so I got denied from my auto loan 5 different times.

So that really helped me understand why is it so hard to get access to credit in the US, because I thought that if you have a job and bank account and money, it should be easy to get access.

Credit and I learned the hard way that in the US you need a credit score, you need a credit history to show that you are a good borrower.

So with that being said, a lot of this is understanding what credit is, how to access credit, and once you access credit, how can you manage it.

So I think that's where startups like Tomo Credit or AI companies can really help consumers understand.

So let's.

About this total consumer credit card, it fluctuates.

Credit card debt.

It fluctuates between around $1.25 trillion.

So are they a valuable overlooked consumer segment, or is there a risk providing credit to those with poor credit history, or are they a valuable overlooked consumer segment?

There are.

There are top three segments where we found a great opportunity.

And we find consumers who are actually creditworthy but happen to be overlooked.

So one segment is definitely like student segment.

So students, they are about to graduate and they're about to have good income but not yet have a good credit history.

And the second segment is small business owners.

So in the US we know that small business is the backbone of the US economy, but they are struggling.

To manage cash flow personally a lot, so they happen to have lower credit score and happen to be denied a lot.

And the third segment is obviously immigrants and who are new to the credit system in the US.

So let's talk about why having credit card companies securely linked to bank accounts to analyze cash flows, income, and account balances, and is this approach more efficient?

What do you think?

Definitely, I definitely think that every financial institutions, credit card companies, auto loans, personal loans, mortgage companies should all look at customers' bank accounts to give them a second chance when someone shows up, let's say you are a lender, someone shows up with a not so great credit score, but if you can see his or her bank account and know that she is actually creditworthy, making good money.

And then not don't have any overdraft.

You would want that as a customer, right?

So my thinking is just looking at someone's credit side of a personal balance sheet is not sufficient, and that's a lose-lose for lenders and borrowers.

So what I'm really hoping to see, and which is happening actually in the next 5 to 10 years, that more financial institutions are leveraging the additional data points that are.

Available by looking at more data points from consumers.

All right, so I want to talk about AI because AI is everywhere.

So your company has an AI tool.

So take us through what that is and how does AI adoption really look like in real consumer finance.

Yes, that's very important because if you think about it, um, do we have consumer mainstream AI adoption yet in August as of today, August 3rd, 202.

My answer is not yet, and the way how I measure or my company measures it is not looking at the tech hub like San Francisco, New York.

We are looking at the broader mainstream consumers and really trying to help them and number one problem they have every day is managing personal finance.

So we are trying to automate it and offer them personalized solutions so it becomes their daily habit to just.

Use AI to better their personal finance.

All right, really quick, we have less than a minute.

So how many Americans, and in your view, how are Americans in different regions of the country really embracing AI?

Yes, so I think the key here is that you have to help consumers with their real problems.

They don't have to know that this is AI or not.

So I think that's the beauty of designing and developing AI consumer AI products.

It has to be so seamless.

And get to the point that customers don't have to think about is this AI helping me, which model is helping me.

They don't need to know that.

They just have to feel like, oh my God, this really knows me, my bank account and my credit profile and everything about me and so personalized.

And talk to me a little bit about efficiency.

I mean, how are you guys making sure everything is efficient with AI?

Give me your thoughts on that.

Oh yeah, definitely.

So for us, we want to make sure that our product is being used by customers every single day.

So this is.

Different thinking from B2B AI adoption.

We don't have to think about token mixing and anything like that because consumers don't want to think about personal finance 24/7, right?

They only want to think about like, you know, maybe 5 minutes of the day.

So for us it's all about how to encourage engagement and make it into their part of daily lives.

Uh, Christy, thank you so much for joining us today.

Great insight on what you guys are doing and how you guys are helping out other Americans.

Thank you so much.

Thank you.

No problem.