\ Innovazione \ BANKS: MODEFINANCE WILL BE THE FIRST ITALIAN RATING AGENCY TO EVALUATE THEM

As of today, an Italian ratings agency will be able to issue evaluations on the world banking system. ModeFinance, the first fintech to be registered as a ratings agency in Europe (July 2015), has now received authorisation (using material changes procedures and market consultation) from ESMA, the European monitoring authority of financial market instruments, to supply “credit ratings” to all the commercial banks of the world: more than 25 thousand institutes in over 200 countries.

This is the first Italian ratings agency, with offices in Trieste at AREA Science Park, to be permitted to perform this function. Also in the international field, the principal ratings agencies concentrate their activities in the corporate sector or on sovereign debt instruments, while the evaluations of the credit system are fewer.

“In this historic stage of international finance”, comments Valentino Pediroda and Mattia Ciprian, founders of modeFinance – there is a request for greater transparency and safety in the market, to protect M&A operations and investments that regard especially small banking and financial firms. We use innovative proprietary technology for our evaluations, “MORE for Banks”, which manages to simplify and summarise the analyses of complex realities such as banks in a single element, the rating.

Thanks to this authorisation and our fintech technology, we will further develop our computer analysis platforms offering an extremely useful service for investment funds, for the banks themselves in inter-bank lending operations and for companies”. ModeFinance was established in 2009 based on an intuition to apply big data to financial evaluations.

Through their own evaluation methodology, called MORE (Multi-Objective Rating Evaluation), modeFinance is able to evaluate the credit risk of companies and banks by combining financial information with many other variables that can highlight the solidity levels of the company evaluated, such as the management organisation, the principal business sector, country and management experience. Information gathered and stored using a complex data mining system, exploring and managing open financial data.

“Big data”, concludes Pediroda and Ciprian, “permits the reduction of business intelligence costs and transforms credit evaluation into an activity that is accessible even to small firms, as well as being accessible in those sectors or in those countries known for less transparency or economic freedom. Thanks to big data, we are able to evaluate any company or bank in the world, even in the absence of financial statements. Today, we can express an opinion on 200 million companies in more than 200 countries around the world”.

To increase the transparency of the “MORE for Banks” methodology, following the guidelines and the best practises outlined by the ESMA, modeFinance has opened a public consultation area in its own web site for stakeholders (investment funds, SGR, SIM, banks themselves) so as to gather opinions, observations and any advice offered.