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First Access

Leveraging mobile phone payments to create credit risk scores for loan applicants

  • Company
  • Financial Inclusion
  • East Africa
  • 2015
  • Exited

The challenge

In East Africa, only 22% of the population has access to formal financial services. Without this access, East Africans are limited in their ability to save, repay debt, manage risk responsibly, and invest in critical services like education and healthcare. In Tanzania and most other developing countries, microfinance institutions need to send loan officers to the remotest locations to collect data and secure new borrowers, which impacts the cost of lending to those individuals most in need of financial services.

The innovation

First Access partners with large mobile network operators to source social, financial, demographic, and geographic data from phone records to predict credit risk of borrowers and improve the security of lending to the poor. Using a proprietary algorithms and data analytics, First Access provides risk modeling, instant credit scoring and portfolio analysis, thus empowering microfinance institutions to make better lending decisions while reducing the cost of evaluating and servicing smaller loans.

The impact

First Access provides greater financial access to Tanzania’s poorest, improving the efficacy of loans by helping officers identify more appropriate loan sizes and generating cost savings for microfinance institutions that may translate to lower interest rates. The company improves the quality of a microfinance institution’s loan portfolio, reducing loss rates by nearly five percent.