Koyo Loans: Company Overview and Pioneering Approach in the UK Market
Koyo Loans, officially known as Koyo Finance 1 Ltd, emerged in the United Kingdom's financial technology sector in 2018. Founded by Thomas Olszewski and Will Neale in London, the company set out with a distinct mission: to offer fair and transparent personal loans to segments of the population often underserved by traditional lenders. Koyo specifically targeted individuals with what are termed "thin credit files," a group that includes expatriates, students, recent arrivals to the UK, and others who, despite being financially responsible, lack an extensive credit history that mainstream banks typically require.
The core innovation behind Koyo's business model was its reliance on Open Banking technology. Instead of solely depending on conventional credit bureau scores, which can be restrictive for thin-file borrowers, Koyo utilised read-only access to applicants' bank transaction data. This allowed their proprietary algorithm to assess real-time income, spending patterns, and overall affordability, providing a more holistic view of a borrower's financial health. This approach positioned Koyo as a significant player in responsible lending, aiming to undercut the high interest rates often associated with subprime lenders by offering more competitive terms based on genuine affordability.
Backed by notable investors such as Frontline Ventures, Forward Partners, and Seedcamp, Koyo successfully raised £3.8 million in debt and equity in 2019, signifying confidence in its innovative model. However, it is crucial for both potential and existing customers to note a significant development: Koyo Loans ceased its new lending operations in March 2025. All existing loan accounts have since been transferred to Capquest for ongoing management and servicing. This article, while detailing Koyo's historical offerings, also provides essential information regarding this transition.
Loan Products, Terms, and Transparent Pricing Structure
During its operational period, Koyo Loans focused exclusively on providing personal unsecured loans. This meant that borrowers were not required to put up any collateral, such as property or assets, nor did they need a guarantor. The decision to lend was based entirely on Koyo's assessment of an individual's transactional behaviour and affordability, as determined through Open Banking.
The loan amounts offered by Koyo ranged from £1,000 to £5,000, providing a manageable spectrum for various personal financial needs. Repayment terms were flexible, typically spanning from 12 to 36 months, allowing borrowers to select a duration that aligned with their budget. A defining characteristic of Koyo's offering was its transparent fee structure. The company prided itself on charging only interest on its loans. This meant borrowers would not encounter additional charges such as origination fees, processing fees, late payment fees, or even early repayment fees. This "no hidden fees" policy was a direct challenge to many traditional and alternative lenders in the UK market, particularly those operating in the subprime space, where additional charges can significantly inflate the total cost of borrowing.
Koyo's representative Annual Percentage Rate (APR) stood at 79.5% (fixed). While this rate might appear high compared to prime lenders, it was strategically positioned to be significantly lower than many subprime alternatives, which often featured APRs ranging from 50% to 99% or even higher. Koyo's aim was to reduce the cost of borrowing for its target demographic by leveraging its superior underwriting capabilities through Open Banking, offering rates that were 50% to 90% lower than typical subprime competitors for a similar risk profile.
Application Process, Digital Operations, and Robust Regulatory Compliance
The application process for a Koyo loan was entirely digital, conducted exclusively through its official website. There was no dedicated mobile application for loan applications or management, nor were there any physical branches. This digital-first approach aligned with its fintech identity and offered convenience for its tech-savvy target audience.
A cornerstone of Koyo's operations was its sophisticated Open Banking–powered Know Your Customer (KYC) and underwriting methodology. Applicants would grant Koyo read-only access to their bank accounts. This secure process allowed Koyo to verify identity and, more importantly, to analyse transactional data for a comprehensive understanding of an applicant's income stability, spending habits, and capacity to repay the loan. This data-driven approach enabled Koyo to make swift and informed lending decisions, often providing quick disbursement directly to the borrower's bank account once approved.
In terms of regulatory oversight, Koyo Finance 1 Ltd was authorised and regulated by the Financial Conduct Authority (FCA) in the United Kingdom, holding Firm Reference Number (FRN) 826425. This crucial detail ensured that Koyo adhered to strict consumer protection guidelines set by the FCA, covering aspects such as fair treatment of customers, responsible lending practices, and transparent communication. Borrowers also benefited from access to the Financial Ombudsman Service (FOS) for dispute resolution and, for qualifying claims, the Financial Services Compensation Scheme (FSCS), providing an additional layer of protection. Koyo maintained its commitment to these standards throughout its lending period, with no public FCA enforcement actions recorded against it.
Customer Experience, Market Standing, and Operational Transition
Customer feedback for Koyo Loans generally reflected a positive experience, particularly regarding its innovative approach and transparency. On Trustpilot, Koyo achieved an impressive rating of 4.7 stars from over 1,200 reviews, with many customers praising the ease and speed of the application process, the clarity of terms, and the customer service. Similarly, Smart Money People reviews also indicated high satisfaction among verified customers. Common positive themes included the accessibility of loans for those with limited credit history and the absence of punitive fees.
However, some feedback, though less frequent, highlighted areas for improvement. A recurring point of contention for some customers was a perception of higher-than-expected total costs when settling loans early, despite the absence of early repayment fees. This could sometimes be due to a misunderstanding of how interest accrues over the loan term. Additionally, some applicants reported delays during peak application periods.
In the competitive UK lending landscape, Koyo differentiated itself from rivals such as Amigo Loans, Sunny, and 118 Money through its unique Open Banking-driven underwriting and its commitment to a fee-free structure beyond interest. While it secured significant funding and gained traction among its target underbanked demographic, a pivotal shift occurred. In March 2025, Koyo Loans officially ceased new lending operations. Following this decision, all existing loan accounts and their management were transferred to Capquest. This means that whilst Koyo Finance 1 Ltd remains the legal entity, Capquest is now responsible for handling all aspects of existing Koyo loans, including repayments, customer service, and any queries. This transition is a critical point for all former and current Koyo customers to understand.
Practical Advice for Potential and Existing Borrowers in the UK
Given the significant operational change at Koyo Loans, practical advice needs to be tailored for two distinct groups: those who were considering a Koyo loan and those who are existing Koyo customers.
For Potential New Borrowers:
- Koyo is no longer lending: It is important to understand that Koyo Loans ceased offering new personal loans in March 2025. Therefore, if you are looking for a new loan, you will need to explore other lenders in the UK market.
- Explore Open Banking lenders: If you have a thin credit file, like Koyo's target demographic, consider other lenders who also utilise Open Banking for affordability assessments. This approach can often provide access to credit when traditional credit scoring might prove challenging.
- Compare carefully: When evaluating alternative lenders, pay close attention to the representative APR, as well as any and all fees. Unlike Koyo, many lenders charge origination fees, late payment fees, or early repayment fees. Always read the terms and conditions thoroughly before committing.
- Check regulatory status: Ensure any lender you consider is authorised and regulated by the Financial Conduct Authority (FCA) to ensure consumer protection and recourse options like the Financial Ombudsman Service.
For Existing Koyo Loans Customers:
- Your loan is now managed by Capquest: All existing Koyo loans have been transferred to Capquest for management. This means your repayment schedule and the terms of your loan remain the same as agreed with Koyo.
- Contacting Capquest: For any queries regarding your loan, including repayment issues, account statements, or making changes, you should now contact Capquest directly. It is advisable to visit the former Koyo Loans website, which now redirects to Capquest's portal for Koyo customers, or search for Capquest's official contact information.
- Continue repayments: It is crucial to continue making your scheduled repayments on time to avoid any negative impact on your credit file. Missing payments can lead to additional charges (if applicable under Capquest's terms, though Koyo's original loans had no late fees) and harm your credit score.
- Understand your rights: As an FCA-regulated loan, your rights as a consumer remain protected. If you have any concerns or disputes regarding the servicing of your loan by Capquest, you still have access to the Financial Ombudsman Service.
Ultimately, Koyo Loans played a significant role in demonstrating the potential of Open Banking for inclusive lending in the UK. While its direct lending operations have concluded, its legacy of innovative credit assessment and transparent fee structures offers valuable lessons for the broader financial services industry.
