Borderless Credit at Prodigy Finance

Head of U.S. Business Development at Prodigy Finance, Joel Frisch discusses his company's evolving expertise in borderless credit and the opportunities this presents for the fintech company's growth.

May 9, 2018

Source: Case Research & Development, Yale University School of Management

“Prodigy Finance sought to fulfill a niche ignored by traditional lending institutions, graduate students going to business schools in countries outside their own. Traditional lending institutions relied on financial records generated in their service area to decide whether to provide funding to a student. Furthermore, most financial services firms boiled down their analysis to a single credit score; an indicator that weighed past spending and credit behaviors, current earnings, and assets.

This loan assessment procedure meant that banks in a school's country were not likely to approve international student loans. Most of international students had no credit history or assets in the country where they were going to school, and could not work while enrolled in a full-time MBA program. Lending institutions had not adapted to the careers of business school students, where individuals could be a citizen of one country, work in a second country and decide to go to school in a third country…

Prodigy believed that their classmates hardly represented a risky investment.  Most had proven track records in their home countries. They had gained admission to a highly selective university based on their potential and took on debt only to accelerate their careers. Like other graduates from top universities, most would move on to high-paying jobs.

To correct this market imperfection, Prodigy collected relevant information, developing a risk assessment model. Home country credit scores were part of this risk assessment model, but this information was blended with other indicators. Among other things, the model took into account non-traditional data points, like the quality of the school the student would attend, nationality, specific skill sets, and admissions test scores to create a personalized expected salary at graduation for a loan applicant.”

From Global Network Case #102-17 , “Prodigy Finance,” produced by the Yale School of Management and INSEAD.

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