PRISM (“Propensity and Risk Model”) represents Thincats’ suite of predictive data models that are used to enhance our understanding of a potential borrower. This enables us to price risk in a way that we believe better reflects a business’ true potential.
The benefit to borrowers is that we can often fund loans that other lenders cannot, because their lending decisions are restricted by traditional forms of credit assessment. PRISM is a key component in helping us make better lending decisions, particularly for growing companies who, we believe, continue to be underserved by traditional lenders such as the big banks.
Developing predictive models to fund the growth of underserved UK businesses
Harnessing data from both traditional and alternative sources
Combining a depth of SME knowledge with pioneering machine learning techniques
PRISM Risk is used to give early indication of our credit appetite and pricing of a potential business loan. The model combines market and company financial data with proprietary non-financial data to provide a credit grade from 1 star (weak) to 5 stars (strong).
The model also provides a security grade for each loan taking into account balance sheet assets and certainty of future cashflows. Security grades range from 1 padlock (limited capital recovery) to 5 padlocks (significant capital recovery).
Based on analysis of hundreds of thousands of businesses over 25 years PRISM Prospect identifies the likelihood of a business to have a funding need over the next 12 months. The model segments businesses into five propensity categories from very likely to unlikely. According to the model those businesses in the highest propensity category are more than four times as likely to have a funding need compared to the average.
Whilst PRISM Prospect has obvious benefits for ThinCats in terms of identifying potential borrowers either directly or through our Business Lynx programme, the model also shows that companies with stronger growth characteristics generally have a higher propensity for funding. ThinCats has found that these companies are typically underserved by traditional lenders.
We believe that using PRISM Risk and PRISM Prospect together gives us a market-leading view of a business from a data perspective. When combined with the personal service provided by our experienced credit and business development teams, PRISM allows us to create better, more bespoke, funding solutions for our borrowers.
“The universe of UK SMEs is continually changing. For example, if you look at the 2.4 million SMEs that were trading in the UK seven years ago, just over 50% are still trading today. During that time a further 1.5 million new businesses have been established. Our data skills and credit experience are critical in deciding whether to lend and at what price.”
Rolf Hickmann, Head of Data Analytics