Salad puts the number of UK consumers labelled underserved or too risky for mainstream credit at more than 20 million. The lender, which describes itself as the UK’s largest consumer lending Community Development Finance Institution (CDFI), assesses those borrowers using Open Banking transaction data rather than credit scores.

Its group CEO, Alex Marsh, was previously UK CEO of Klarna. He joined Salad in 2023 as a non-executive director and chaired the Salad Finance board before stepping up to lead the group. Speaking to The Fintech Times, he set out what transaction data shows that a credit file does not, and what it would take for mainstream lenders to serve the borrowers they currently turn away.

Marsh’s starting point is that a credit score looks backwards. “A credit score can tell you a lot about someone’s past if they’ve used credit products, but very little about how they are managing their money today,” he said. “It can capture missed payments or a CCJ that may sit on someone’s file for years, but it often will not tell you whether they are paying their rent on time, covering their bills, managing a tight budget well or showing signs of financial stress right now.”

Open Banking, he argued, fills that gap with a real-time picture of income, expenditure and financial behaviour. “Having analysed billions of transactions at Salad, what we see again and again is that many people who are declined by mainstream lenders are actually managing their finances responsibly, living within their monthly paycheck and meeting all their payments such as direct debits,” he said.

“They are not necessarily shut out because they cannot manage their money. Often, they manage it much better than people who have a larger income. They are shut out because the traditional credit score system does not have enough information to understand them properly.”

The price of being declined

For many of Salad’s customers the realistic alternatives are narrow. Marsh said they can include “high-cost short-term credit, doorstep lending and, at the worst end of the market, unregulated lenders.” Salad says its customers save an average of £454 on a typical £1,075 loan compared with the lenders otherwise available to them.

“The £454 average saving matters because it is not simply about offering a cheaper loan,” Marsh said. “For someone managing a tight household budget, that difference can determine whether borrowing remains affordable or becomes something they struggle to get out of.”

In his view, mainstream lenders either decline this group or do not compete for it, often because traditional credit data suggests more risk than a fuller picture of current finances supports. “The result is a real contradiction: people with the least financial headroom can end up paying the highest price for credit,” he said.

A market failure, not a niche

Marsh frames the gap as a commercial problem as much as a social one. He pointed to around £2bn of unmet credit demand in the UK, and to an estimate from Fair4All Finance that improving financial inclusion could add roughly £7bn a year to the economy. “So this is not just a social issue; it is a significant market failure and a commercial opportunity,” he said.

Most of the tools needed already exist, he argued. Open Banking gives lenders a clearer view of current affordability and removes the need for manual underwriting, which at some lenders still means applicants sending in scans of bank statements and payslips. “The other big barrier is appetite: too many lenders still see this segment as either too risky or too expensive to serve,” he said.

Salad received more than one million applications last year and has lent over £300m to more than 190,000 customers since it launched in 2018. “That is not a niche market or a charitable exercise,” Marsh said. “It is a sizeable group of consumers with genuine demand.” Regulation could speed the shift by supporting affordability-led lending and better use of Open Banking, he added, but in the end the decision sits with lenders, who he said “need to stop asking whether this market is worth serving and start asking how to serve it responsibly.”

What Klarna taught him

Marsh’s time at Klarna shaped his view that lending at scale is a data problem. “What Klarna taught me is that offering consumer credit at scale, and importantly with sustainable unit economics, is fundamentally a data challenge,” he said. “It is critical that you make good lending decisions for the customer and the lender, using the best possible information.”

What he had to unlearn, he said, was “the assumption that the traditional credit system has already solved this for all consumers. It hasn’t, and particularly for consumers on lower incomes or those with a limited recent credit history.” People often come to Salad at a pressing moment: to fix a car, replace an essential appliance or deal with an unexpected bill.

“We are not arguing that everyone should have access to credit,” he said. “We are arguing that everyone should have the opportunity to be assessed fairly.”

Avoiding a new black box

Richer data raises its own question: whether one opaque score is simply being swapped for another. Marsh said a decline at Salad should be “rooted in affordability rather than a historic marker on a credit file”, and that where possible the lender should be able to explain what is driving the decision “in terms a customer can actually understand”.

Salad says it was the first lender to embed benefit checking into its application journey, so that an application can still help someone identify support they may be entitled to when the company cannot lend. “Ultimately, using better data only works if it leads to better decisions and greater transparency,” Marsh said. “The aim is not to create a more sophisticated black box; it is to understand someone’s circumstances more accurately and lend only where we believe it is genuinely affordable.”

The next two years

Marsh is blunt about the pace of change in credit. “Today you can open a bank account in minutes or move money across borders in seconds, but the technology used to determine whether you’re safe to lend to was built for a different era,” he said. “Technology simply hasn’t caught up and the people on the edges have paid the price.”

The shift he wants is for Open Banking to become the normal way affordability is assessed, rather than a bolt-on. Salad says the benefit checks built into its applications have flagged £872m in unclaimed benefits for more than 300,000 of its applicants, and it reports every repayment to the major credit agencies as part of a credit rehabilitation offer intended to give borrowers a route back into mainstream credit.

Marsh called two years an ambitious timeline for Open Banking-based lending to become the norm for underserved borrowers. “It’s on the market to recognise both the societal need and commercial opportunity, and act,” he said.

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