With the fintech sector firing on all cylinders again, we’re seeing plenty of share price action.
Today, Credit Intelligence Ltd [ASX:CI1] is leading the charge, with the CI1 share price up 25% at time of writing.
The tiny stock surged on the back of an announcement that it’s scooping up a 60% stake in YOZO Finance.
Let’s dissect the details…
With this acquisition, Credit Intelligence is hoping to ‘revolutionise’ small business lending by putting YOZO’s unique AI platform to good use.
In fact, Credit Intelligence is aiming to become a leader and pioneer of the technology. It will utilise YOZO’s AI in order to give it a competitive edge in both lending and debt management for SMEs.
Getting the deal done hasn’t cost it all that much, either. Half the deal was paid in cash — a $1.38 million consideration — and the other half was funded via a scrip offering with a six-month escrow.
So, just how valuable is YOZO’s platform?
Well, here is how its creator, Dr Guangdong Xu, describes it:
‘The YOZO project aims to develop a novel data-driven and machine learning-based system that enables a personalized and streamlined experience of small business loans. More specifically, the system with machine learning algorithms under the hood can instantly evaluate the risk of a borrower and identify the best lender for the specific situation.
‘The algorithm learns from data and improves over time. With the developed system and a step by step guided front end, users would be able to navigate and use the system without any technical & finance background knowledge.’
Together, with Credit Intelligence’s capabilities, the pair could become the next big fintech sensation. At least, that’s what shareholders will certainly be hoping for.
Whether they can achieve this, though, remains to be seen over the coming months.
What’s next for Credit Intelligence?
The short-term goal for Credit Intelligence now is to onboard YOZO’s tech, integrating the platform and its signature AI into CI1’s operations.
Beyond that, the company already has plans for the rollout of new services in the future, too. This includes a novel ‘buy now, pay later’ solution for SMEs — a product that should be available sometime in 2021.
Until then, though, it has its hands full with plenty of development, which is key if it wants to become a serious competitor.
If, however, you’re looking for a more mature fintech operation, then I’d suggest looking elsewhere. Our latest fintech report details three of our favourite picks from the sector, right now.
Get your free copy of the full report, right here.
For Money Morning