Leveraging mobile phone payments to create credit risk scores for loan applicants across Africa
FIRST YEAR OF INVESTMENT
In East Africa, only 22 percent 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. A major barrier to improving financial inclusion among the poor is the lack of accurate information needed to assess risk.
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.
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 their 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.
First Access also offers the opportunity to improve the quality of the loan portfolio, reducing loss rates by nearly five percent.
First Access is providing 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.
First Access will improve the marginal impact of one of the most widespread and potentially transformational products utilized by the poor: microcredit.