ClearScore and first-mover disadvantage

Last week venture-builder Blenheim Chalcot announced that its credit monitoring business, ClearScore, is to be sold to Experian for ￡295m.  

This is a fantastic exit, but I can't agree with the narrative in Techcrunch and elsewhere that ClearScore's ascendancy has been driven by product innovation, in the form of its "financial product matching engine".

Techcrunch suggests that ClearScore invented the matching of customers to financial services based on their credit score, commenting "older and larger businesses are often opting to buy in new technology and talent rather than trying (and potentially) failing to do this within their own incumbent infrastructure".  

In fact, Experian built its own credit matching technology for consumers a decade ago, launching it to CreditExpert subscribers and through a standalone website in 2009. (Disclosure: I was Head of Product for it at the time).    

Known first as "LowerMyBills" (to align with the then-Experian-owned US mortgage lead generation business) and later as "CreditMatcher", the product retrieved a customer's live credit data from the Experian bureau and used it to tailor comparison tables of loans, credit cards, and mortgages according to lenders' accept/decline criteria.  

It made a modest contribution to revenue - from memory, in the mid single-digit ￡millions. The team had two continual frustrations. First, that lenders were unwilling to pay a premium for the loan, credit card, and mortgage leads we generated - despite the fact that these leads converted to sale at far better rates than their traditional sources of demand. Second, that we couldn't get the attention (or the media budget) of Experian's digital marketing team, who were focused on acquiring new customers for CreditExpert - an established product which drove the vast majority of Experian's UK B2C revenues.

Eventually I started talking to price-comparison websites about embedding the credit-matching product in their experiences. This would have meant scale without marketing budget for us, while their commercial leverage with lenders would have enabled them to negotiate premium rates for the leads.  

Moneysupermarket showed the most interest but then went quiet. A few months later, they announced an investment in and commercial partnership with HD Decisions, a startup who had built a CreditMatcher-type product called SmartSearch with Equifax bureau data, specifically designed for the comparison market. 

4 years later, Experian would acquire HD Decisions. This was long after I had left to join Bought By Many, but it's clear to me that the rationale for this transaction can't have been HD Decisions' back-end credit-matching tech, since Experian already had its own. Rather, it must have been a combination of HD Decisions' client list, and the product's user experience layer that Experian wanted.  

This brings us back to ClearScore. Its tech isn't original, as we have seen. Its value proposition isn't original either - Noddle, a subrand of CallCredit, got to market with a free-for-life credit reporting proposition 3 years earlier; as did CreditKarma is the US. Nor is its growth model - ClearScore borrows heavily from Experian's own marketing playbook, not least in its fondness for daytime TV.  

Instead, what makes ClearScore valuable is its traction with users. It has over 6 million customers - an incredible achievement for a 3.5 year old business in a low-interest category; and more evidence, perhaps, that not being the first mover can be a real advantage.