The housing situation in Canada continues to deteriorate, with rental prices skyrocketing and low inventory. New immigrants continue to struggle, but there’s one company that is changing the game in this space. Waterloo-based fintech startup Vambora is enabling financial inclusion for credit-invisible consumers through a digital financial profile powered by global Open Banking data sources. Vambora is on a high-growth trajectory and was recently backed by Forum Ventures. We recently sat down with the team to discuss their developments in helping newcomers to Canada, as well as their latest partnership news and platform updates..
Describe what you do in 140 characters or less.
Vambora enables financial inclusion for credit invisible consumers through a digital financial profile powered by global Open Banking data sources
What was the inspiration behind Vambora?
Amadeu, Laura, and Alessandro all experienced the problem of ‘credit-invisibility’ firsthand when relocating from Brazil to Canada. Mark on the other hand, encountered this problem when he started his career in financial services. He was working at a retail bank branch in Vancouver, a hot spot for international students and foreign workers. Through this experience, he would submit credit applications for consumers with ample savings, responsible spending patterns/financial habits, consistent incomes.. but unfortunately.. no credit history established here in Canada. He had countless phone calls delivering bad news to deserving consumers, and knew there needed to be a better solution to help newcomers access essential services upon arrival.
How does Vambora bridge the gap between landlords and tenants?
Vambora bridges the gap between landlords and tenants through the so-called Trust Profile, a digital financial profile powered by global Open Banking and Identity Verification data. The Trust Profile offers a comprehensive view of a potential tenant’s financial behaviour and stability, enabling landlords to screen newcomers during the lease application process.
Here’s a breakdown of how Vambora achieves this:
Open Banking Data: With consumers consent, Vambora leverages open banking to access their financial information from various institutions, including banks and financial service providers. This data encompasses a wide range of financial details, such as account balances, transaction history, income verification, debt obligations, and investments.
Holistic Financial View: By accessing this wealth of financial data, Vambora assembles a holistic view of a credit invisible consumers financial habits and stability. This paints a comprehensive picture of their financial health, providing housing providers with valuable insights into their creditworthiness and financial stability.
Creditworthiness Assessment: With the compiled financial data, Vambora offers housing providers a reliable means of assessing the creditworthiness of credit invisible consumers. Traditionally, these individuals might have been overlooked due to a lack of credit history, but Vambora’s platform allows landlords to evaluate tenants based on tangible financial data rather than traditional credit scores.
Enhanced Decision-Making: Armed with this detailed financial information, landlords can make more informed decisions when selecting tenants. They can confidently evaluate whether a tenant has a steady income, manages their finances responsibly, and is likely to fulfill their rental obligations.
Financial Inclusion: Vambora’s approach promotes financial inclusion by extending rental opportunities and reducing financial barriers for a wider demographic, including those who have been excluded from the traditional credit system. This fosters greater access to housing for individuals who may not have had a chance otherwise.
What at the major challenges immigrants face for accommodation? How does the tech can help?
New immigrants to Canada are the most vulnerable individuals when it comes to securing housing. Due to a lack of credit history, they are forced to compete against domestic applicants. As a result, many landlords are charging up to twelve month’s rent to sign a lease agreement with newcomers.
The Trust Profile aggregates financial data directly from thousands of financial institutions globally, empowering new immigrants to demonstrate their creditworthiness established in their origin country.
Currently, Vambora’s solution has Open Banking coverage in over 20 countries. For its KYC/AML solution, they leverage Plaid to verify identity and documents for individuals in 200+ countries and territories.
Can you talk more about open banking, especially for developing a fintech company? What is Open Banking?
Open Banking is a system where banks and other financial institutions provide access to their data to third-party developers via Application Programming Interfaces (APIs). This allows these third-parties to build new financial products and services. The main goal of open banking is to increase competition and innovation in the financial sector. It enables consumers to share their financial data with authorized providers, such as fintech companies (i.e. Vambora) or other banks, in a secure and standardized way.
Open banking is regulated in many jurisdictions to ensure that customer data is shared securely and with the customer’s explicit consent. The regulations also typically require third-party providers to be authorized or licensed, further protecting consumers.
What does this mean for a developing fintech company?
For a long time, access to credit has been controlled by corporations using the traditional credit system as the main method to analyze consumers’ creditworthiness. With Open Banking, for the first time in history, we have the ability to transfer power back to consumers, eliminating credit as a gatekeeper to economic opportunities. As a result, this new technology can foster financial inclusion for credit invisible consumers.
The first digital financial identity system powered by global Open Banking and Identity data:
Vambora has built a web platform that enables consumers to create and securely share access to their digital financial profile. The permission-based system enables consumers to control who they want to have access to their financial data. For businesses, Vambora offers a scalable, secure and compliant solution to access consumers’ data for underwriting credit invisible individuals.
Congrats on the new partnerships with Neo and KOHO! Can you share more about this?
Vambora has recently forged partnerships with two prominent Canadian fintech companies, Neo Financial and KOHO, both of which offer innovative financial services distinct from traditional banks. These collaborations are aimed at addressing the challenges faced by newcomers to Canada, who often struggle to access bank accounts and essential financial services due to the absence of in-person identity verification, and lack of established Canadian credit history.
Working with Neo Financial, Vambora aims to eliminate this barrier by providing newcomers with the opportunity to access bank accounts and critical elements such as direct deposit forms before relocating to Canada. After landing in the country, newcomers will have the ability to get off the plane and immediately access their funds, removing the pain point of physically visiting a bank branch to confirm their identity. Additionally, they will have the capability to leverage the direct deposit form to setup services before arrival, such as housing, utilities, cell phone plans etc. This partnership promises a smoother relocation journey through digital card solutions and identity verification.
The collaboration with KOHO plays a pivotal role in enhancing newcomers’ settlement experience by granting them access to a progressive alternative for building credit. Through this strategic partnership, Vambora is committed to facilitating newcomers in expediting their credit-building journey within the Canadian financial landscape. What sets KOHO’s credit-building product apart is its impressive track record – users typically experience an average credit score boost of 22 points over a span of just three months. The good news for Vambora users? The first 3 months is free! This not only streamlines newcomers’ transition to Canada but also empowers them with the financial tools and resources necessary to thrive in their new environment, ensuring a smoother and more prosperous settlement experience.
What’s next with Vambora? Are there any exciting development or feature coming up with the platform?
We’re building a global financial identity system with the goal to become a Trust hub for businesses and consumers in general. We all know the importance of immigration to Canada’s future, but did you know that 70% of the volume of international students come via recruiting agencies?
We’ve been talking to recruiting agents, and the biggest issue for them is to make sure their clients are set up to succeed in their relocation journey after school enrolment is secured. The problem is their clients don’t have a credit history, nor they understand the challenges they’ll face in their settlement process. If you ever moved abroad, you know how critical planning is. We believe that recruiting agents and other immigration professionals play an important role in guiding their clients through this journey. For this reason, we’re building an Affiliate Portal so they can help their clients manage a ‘to-do’ list for their international relocation. These tasks will be automatically populated for their clients to complete, and it can be used as a foundation for creating a more robust step-by-step plan.