Meet Tatiana Sotnikova 👋
Atto’s Product Manager, Tatiana Sotnikova, is a seasoned credit risk professional. In this Q&A she shares her journey of fleeing Ukraine; going from Chief Risk Officer at an international bank in Ukraine to facing credit invisibility in the UK.
She discusses the challenges newcomers face in accessing credit, the impact of open banking on her credit score, and the way forward for newcomers to the UK.
1. Can you share your background in credit risk management?
I started as a credit analyst many years ago and worked my way up to Chief Risk Officer at Piraeus Bank ICB in Ukraine. I also consulted the World Bank for various international markets such as Eastern Europe, the Caucasus and Central Asia. My role there was advising the top management, shareholders and boards on how to improve efficiency, minimise risk and optimise portfolio performance.
I've dedicated over 20 years to risk management, primarily in large international banks.
2. Thanks Tatiana. Can you tell me about your personal experience of moving to the UK. What were the circumstances and what was the first touchpoint with financial services?
I didn’t have a chance to prepare. I came to the UK to escape the war in Ukraine; I didn’t plan for it, and it wasn’t my decision – I just had to move quickly. Thankfully I had the opportunity.
Engaging with financial services in the UK for the first time was quite a shock.
In Ukraine, my credit history was robust. I repaid my mortgage (twice), any car loans, and had credit cards from different banks. Being from the industry, I knew how to navigate credit products well and had access to all the financial products I needed and on the most favourable terms.
Upon arriving in the UK, despite a stable income and savings, accessing credit was unexpectedly challenging.
I had recently started working for Atto two months before arriving in the UK. After, I opened an account with a high street bank to start receiving my stable salary.
Expecting a credit card to be automatically available, I was surprised when they informed me that I wasn't eligible without further explanation. They advised waiting three months and trying again, but even after multiple attempts over 12 months, I couldn't secure a credit card with a limit as low as £500-600.
At this point, I also still had my consultancy income coming from The World Bank.
While my stable salary covered my expenses, not having a credit card posed other challenges – I couldn’t even rent a car. As someone with an extensive background in credit risk, the situation was particularly frustrating and embarrassing.
3. How did you navigate these challenges, especially concerning your credit score and eligibility for financial products?
I started investigating this pretty quickly. There’s a few apps I started using – Credit Karma and one from Experian. They offer some advice on how to improve your score but it was clear there wasn’t much I could do.
I explored options like applying for less favourable credit cards to build my UK credit history. I applied and got accepted for a very high interest credit card – initially for a £300 limit, then £600. Thankfully I could afford this but not everyone can say the same.
It wasn't until I connected my account via open banking that I saw a significant change. This was pivotal in improving my credit score and eventually gaining access to better financial products.
4. Could you explain how sharing your bank statement impacted your credit situation?
Pretty soon after connecting my account via open banking I received a £10,000 credit limit from my bank.
Open banking provided a transparent view of my financial behaviour in the UK, which traditional credit bureaus couldn't capture effectively. It highlighted my stable income and responsible spending habits, data points crucial for the bank to understand my creditworthiness.
Fast forward two years and my credit score is near perfect – but I suspect if I disconnected my account, I’d see a significant drop.
5. From your perspective, what specific areas of credit scoring are traditional Risk Officers missing when assessing people with new-to-country status?
From their perspective, newcomers - like me - are essentially unknown entities in terms of credit behaviour. Banks lack reliable information about our financial history and how we manage credit in our new environment. For them, our past accomplishments or positions in our home countries don't necessarily translate here, even though over 50% of the adult Ukrainians who came to the UK to flee the war are now employed with stable income.
6. How do you see open banking bridging these gaps in credit assessment for newcomers?
Open banking data is critical in assessing actual financial capability rather than relying solely on past credit history, which may not accurately reflect someone’s current financial standing.
The key information a lender needs is the sufficiency and stability of the inflows, alongside the amount/structure of outflows from an account. It’s essentially the difference between credits and debits. It’s asking the questions ‘How much do you earn? How much do you spend? Are there any savings? What’s your affordability?
Open banking answers that. In seconds.
It gives lenders access to real-time data from the last 12 months. Providers like Atto can then build insights on top of the categorised transactions, such as income verification or affordability, alongside other calculations based on the real-time cash-flow position of an applicant.
7. Can open banking help lenders distinguish when there’s been a change in financial circumstance or behaviour?
Yes, in many ways.
As we spoke about, open banking provides detailed insights into the nature of income streams flowing into someone's account. For lenders, this means they can differentiate between various sources like benefits or salary payments. This distinction is crucial because it gives lenders a clearer picture of the borrower's financial stability and capacity to repay loans.
For instance, when a borrower transitions from benefit income to a stable salary, it signals increased financial reliability. Lenders can then use this information to offer more tailored and potentially higher-value financial products, benefiting both parties involved.
Also, something we focus on heavily at Atto, is merchant identification and transaction categorisation.
When accurate, this data can provide lenders with valuable insights into their customers’ spending habits by showing where and how they spend their money.
To give another example, lenders can analyse which merchants they see the most in specific cohorts of their portfolio, whether it's high-end retailers like Waitrose or more budget-friendly options like ALDI. This information not only helps lenders understand their customers but also how their consumption behaviours change over time. Another good indicator could be presence/amount of payments to insurance companies – this demonstrates responsible behaviour.
8. In your opinion, what’s the optimal balance between using credit bureau data and newer sources like open banking data? What unique advantages does each bring to the table in providing a comprehensive risk assessment?
Open banking gives Risk Officers a real-time view of customer financial behaviour, which complements the historical perspective provided by credit bureau data.
While credit bureau data informs about past credit behaviours and risks, open banking data provides insights into the present financial health and spending patterns. This combination allows risk officers to not only assess past creditworthiness but also to predict future behaviours and potential risks more accurately.
By observing real-time financial activities through open banking, risk officers can identify improvements or deteriorations in a customer's financial situation promptly. They can then make proactive decisions such as pre-emptively offering increased credit limits to low-risk customers. This is a great example of how a Portfolio Manager can optimise performance while minimising potential losses.
In essence, integrating open banking data alongside traditional credit bureau information provides a more holistic and timely approach to risk management in lending.
9. In your opinion, what should the ideal process look like for people with new-to-country status seeking access to credit in the next 5 years?
My ask would be: don’t just turn them down immediately – analyse all the data available first.
Use every source you have to try and build a picture of previous credit performance. Or, make a judgement call if you have an overwhelming amount of current information suggesting that someone is financially able to take on a credit commitment.
Believe me – many of those people would be even more accurate with their credit repayments; their reputation in a new country is at stake, and they know it!
I think lenders are losing substantial revenue from responsible borrowers in this client segment.
10. Any final thoughts on how the industry should evolve to better serve other demographics in credit risk management?
These challenges extend beyond just newcomers or thin-file applicants. People with less-than-ideal credit histories face major obstacles due to past financial issues that may no longer reflect their current situation.
The system often penalises people for past mistakes without considering their present circumstances. This can be particularly frustrating for students or young professionals who are still learning to navigate financial responsibilities.
It’s also common knowledge that there are technical errors or misunderstandings. A common one we hear is missed bill payments due to student flat sharing situations. This can unfairly impact credit scores and hinder access to credit.
Another big talking point in the market is the new generation of popular buy-now-pay-later (BNPL) providers. There’s an obvious risk to young people in the UK given the products they’re attached to and how the services are marketed.
While BNPL providers currently have the option not to report to credit bureaus, upcoming changes might enforce reporting, but we’ve been saying that for a while.
A huge thanks for your insights Tatiana and sharing your very personal story with us. We’re all super proud and very lucky to work alongside you at Atto.
Thank you 😊
This Q&A session with Tatiana tells a very important story of the experience of someone with new-to-country status interacting with financial services in the UK.
This experience is shared by many other Ukrainians who have been displaced due to the ongoing war. Tatiana mentioned a local charity the Tabletochki Charity Foundation that are a Ukrainian non-profit organisation that help children with oncological and haematological diseases. We’ve donated and ask that, if it’s within your means, you consider too, however small.
Find out more here: https://tabletochki.org/en/
