Jasper, was an American FinTech whose service was discontinued in the second half of 2022.
Jasper announced the ceasing of operations with a quite abrubt and spare email, leaving thousands of customers furious and providing close to none information on why the service was discontinued.
And yet, Jasper Card service was an interesting experience from a Financial Inclusion perspective. As this FinTech tried to use artificial intelligence to transform the way creditworthiness is assessed, moving from a “credit history” based approach to a “credit potential one”.
Let’s see what that means.
Credit Potential
We all know artificial intelligence can improve and speed up new customers’ onboarding and approval, enhancing the user experience on digital channels for banking and insurance products.
That’s cool. But Jasper Card aimed at something more. On its website, the company stated they were “an advanced financial services company challenging how traditional financial institutions make money”.
More specifically, Jasper used AI to evaluate applicants’ “credit potential”.
This “potential creditworthiness” concept is especially helpful when it comes to evaluating new-to-credit people, such as recent college graduates or relocating professionals who arrive in the United States (but the same goes for any other country) and have no local credit history.
The Jasper Card Program
The Jasper model was based on an algorithm-driven underwriting platform that relied on data such as income, employment, and a variety of other sources for producing a credit score based on the customer's predicted future credit behavior rather than looking backward.
As declared by the company, in the Jasper Card program, customers are approved based on their future potential credit, not only their credit history.
"It's time to present a new disruptive way for people to manage and grow their personal finances," said Elnor Rozenrot, Founder and CEO of Jasper Card. "Many banks have flashy websites and mobile apps, but the essence of the digital revolution that's democratized so many parts of our life—win-win, fairness, the economy of one—has not followed. Imagine all your financial products, whether it's credit cards, bank accounts, or loans, combined into one single service that just works for your benefit”.
Jasper Card onboarding
Jasper Card onboarding process was meant to be easy and quick. Although applicants had to report their Social Security number to Jasper within 60 days of activating their card, it was not required upfront.
Instead, applicants needed to provide their passport, visa information and proof of income in the US.
No credit score was required. When vetting an applicant, the company looked at over 360 data points to determine the creditworthiness of the applicant, including debt-to-income ratio, the applicant’s online presence and whether they had secured a job offer from an employer.
Too few costs and fees?
Jasper did not explain why the service was discontinued, but we can presume the business just didn’t take off. It is therefore interesting to look at the fee model of Jasper, which was very advantageous for the customers.
Jasper applied fewer costs: for example, cardholders avoided foreign transaction fees, meaning there weren’t extra charges to use the card internationally. And credit limit was relatively higher than other cards.
With no annual fee and a maximum $15,000 credit limit, the Jasper card looked like a worthy alternative to secured cards for many who have little or no credit history.
There was also no penalty APR, so the issuer would’t raise the interest rate if the customer paid late or missed a payment. And unlike secured credit cards, which require upfront collateral, customers didn’t owe a security deposit.
Lessons learned
Jasper also provided clear and simple educational resources and an easy-to-use account management mobile app, differentiating from loan-shark rates that prey on those without the privilege of great credit.
And despite of the unhappy ending of its story, it is a good example of how the credit sector can use alternative data to enhance Financial Inclusion.
