LemFi, a London-based fintech company known for its cross-border payment services, has announced the acquisition of UK credit startup Pillar. Signaling a strategic move as the company is expanding beyond remittances and introducing new credit solutions tailored specifically for immigrants, the acquisition is expected to address a long-standing challenge for millions of immigrants who want to build credit in a new country.
For many immigrants, moving to a new country often means starting from scratch financially, even if they had strong credit histories in their home countries. Due to the fact that these records rarely transfer internationally or across borders, immigrants face challenges with accessing basic financial products like credit cards, loans, or even mobile phone contracts. In the UK alone, about five million people are considered “credit invisible,” with immigrants disproportionately affected.
Ashutosh Bhatt, Co-founder and CEO of Pillar, who initially moved from India to the UK to take up a job at Barclays knows all about the humiliating and limiting experience. “I couldn’t access any of the everyday (financial) products I had in India. Despite arriving and earning a good salary at Barclays, I couldn’t even get an iPhone!” Bhatt said.
“Immigrants are always dealt a bad hand, especially if they’re coming from emerging markets – we need equitable access to credit for everyone. When the world is busy building an interplanetary life, we still can’t offer a bank account or credit card to someone from another country!” he adds. “With Pillar, LemFi will increase its reach by 10X and build truly global access to credit.”
LemFi’s acquisition is designed to tackle this problem head-on. Pillar, founded in 2021 by Ashutosh Bhatt and Adam Lewis, both former Revolut executives, developed technology that uses global credit data and alternative information to help immigrants prove their creditworthiness. In 2022, the credit-focused startup raised £13 million ($16.9 million) to bring its vision to life, which was allowing immigrants to build or transfer their credit profiles, therefore opening doors to essential financial products much sooner after arrival into the new country.
By acquiring Pillar, LemFi gains access to its proprietary credit scoring technology and its Financial Conduct Authority (FCA) credit license. This will allow LemFi to integrate credit-building tools and products directly into its existing app, which already serves over two million customers across the US, UK, Canada, and Europe.
Since launching in 2021, LemFi has rapidly grown its user base and transaction volumes. The company now processes over $1 billion in monthly transactions and recently raised $53 million in a Series B funding led by Highland Europe. LemFi’s core service, right from its launch, has been enabling fast, affordable remittances for migrants sending money home. Now, with the addition of a credit solution, the fintech startup aims to become a one-stop financial platform exclusive to immigrant communities.
“We have long stated our vision of building a full-stack financial service for immigrants everywhere. Credit marks the next frontier for us in this journey. Rian [Cochran] and I are particularly pleased that Adam and Ash have agreed to join us in building it,” LemFi’s co-founder and CEO, Ridwan Olalere, said.
This acquisition has shown promise so far in the sense that the service has attracted over 8,000 users in its first six weeks of private beta testing that offered revolving credit lines of up to £300, £700, and £1000 depending on the profile or credit history of the immigrant. LemFi also reports that user numbers are growing at 18% week-on-week and, as such, they plan on expanding this update further in the coming months. For example, customers can now access virtual cards through Apple Pay and Google Pay, while physical credit cards are set to launch with the help of this acquisition.
It is important to note that this new service uses both traditional and alternative data to assess creditworthiness. This means that even if a customer doesn’t have a UK credit history, LemFi can use information from their home country, as well as other data points, to make lending decisions.
Also, the timing of LemFi’s move is significant as the UK continues to see high levels of immigration, with net migration exceeding 700,000 people in 2022. With the acquisition of Pillar, LemFi is positioning itself as a leader in providing immigrant-centered financial services.
