modefinance growth, one step further: TeamSystem acquires 59%

modefinance 8 March 2021

TeamSystem enters modefinance capital

Last week’s announcement of TeamSystem entering modefinance capital through an initial stake of 59% -with a buyout option by 2025- represents a huge milestone for us, for an exponential growth in the next few years.

The new shareholders acquire 43% previously owned by the Kauri Group (formerly Corvallis), which accompanied our growth from 2015 to 2020.

“The operation is a further step within our broader growth strategy which aims to acquire know-how in specific and vertical markets, such as Fintech – words by Federico Leproux, TeamSystem CEO –. Entering modefinance is part of this path and will allow us to expand our offer, to better support our customers in the transparent and reliable management of credit risk”.

“We believe that the combination of advanced evaluation methods and process automation, with business management services – where TeamSystem has a strong positioning – is the fundamental step for modefinance to move over being a trailblazer and become a leader in the entire world of credit risk analysis and assessment”, declare the co-founders Valentino Pediroda and Mattia Ciprian, who will keep on guiding modefinance as co-CEOs.

Now what

While continue pursuing these past years’ double-digit growth and look for a wider internationalization, this move extends an ongoing partnership on integrating some of our models and score evaluation within existing platforms and solutions for the corporates’ and consultants’ world. As an example, tools to aggregate third-party data and automatically analyze them are integrated in Check Up Impresa, a cloud platform developed by TeamSystem and dedicated to professionals and companies, allowing you to constantly monitor business’ health and prevent crisis situations.

Thanks to being registered as a Rating Agency according to European Regulation N.1060/2009, modefinance is a one of a kind firm that combines Rating Agency privileges and expertise, with an expanded and skilled Fintech team, and which has already established itself on the market thanks to the application of innovative proprietary methodologies.

Apart from the continuous development of existing solutions – Tigran, ForST and s-peek above the others – and the profitable growth in Credit Rating evaluations, two are the main pillars to focus the next future: process automation and nowcasting. In fact, as Tigran continues to expand being adopted by banks and financial institutions, its modularity is genuinely populated by new functions and services, making this the first complete Rating-as-a-Service platform: the path for process automation broadens into new markets, where the portfolio’s counterparty risk assessment, investment and exposure management are fundamental.

What does process automation mean?

Automate procedures means to be on time: in a fast-changing and rapidly-evolving world, we need to stay up-to-date, and relying on outdated information is no more helpful. Global challenges, even non-forecasting events such as the pandemic, lead corporates, banks, SMEs and professionals to be able to answer: what -vital faster decisions and adequate countermeasures; and why -transparency on data usage and a deeper understanding of the grounds.

The reason brings on the field the concept of NLP (Natural Language Processing), which is a technology able to assist on developing more transparent and objective tools.Process automation is already a thing, even if we don’t notice it explicitly: for example, Amazon marketplace is completely based on it, simplifying the routine and letting talents focus on the real flow problems; when talking about finance, lending is the classic example of an automated process: data are extracted, arranged and aggregated in a complex and sequential way.

What does nowcasting mean?

Forecasting has demonstrated not to be fit for the present: in fact, as weather forecasting is reducing time and projections, it is becoming nowcasting. This means that, as data and information are available in realtime, we are able to base our decisions -business, vacation, traffic moves, anything- on concrete and short-time forecasts: that’s when we talk about nowcasting.

To give a practical example, right now all over the world analysts are monitoring tsunami, snow avalanches, ship traffic, even the hotel bookings, to better understand current and future situations. Let’s take the hotel presence case: in London, just before the pandemic, companies where able to use advanced AI tools to give a 360°-view on London’s financial health just by tracing rooms’ bookings, taxi’s traffic and restaurant new openings.

Getting back to finance, and talking about credit risk analysis and management, in Italy wewere able to trace companies’ financial data only by accessing Centrale Rischi (Banca d’Italia database), now everyone adopted the PSD2 regulation, and the next step is going to be the centrality of alternative data, and the best tool to aggregate and extract their value.

What’s next for Credit Rating?

Not to forget that modefinance is a regulated Credit Rating Agency (CRA): these last few years have been incredibly important on the rating side, acquiring a fundamental role in Italy, especially in the minibond market: first CRA in 2019 for rating evaluation on minibond emissions, 50% of the 2020 new emissions’ market, with a strong positioning in partnership with advisors, banks and arrangers.

On the banking side, we provide ECAI Ratings: being a certified External Credit Assessment Institution means we are recognized -by the competent supervisory authority- being able to produce external creditworthiness assessments, which can be used by banks for the purpose of calculating, with the standard method, the prudential capital ratios based on Basel II. This, thanks to the internal adoption of proprietary software and tools, appropriately tailored to the needs of our rating and financial analysts, and in compliance with the entire regulated process of a Rating Agency.