When two years ago I found a report by the experts at McKinsey & Company stating that about 2 billion people across the globe today had no access to banking or other basic financial services, I was shocked. Not because it’s the obvious violation of human rights but because that’s mean that global economy is losing potential billions of customers. I’m sure that providing financial services to those who need it the most is one of the main steps on the way of the economy bootstrapping.
However, I understand that it is not easy even for worldwide corporations to enter new emerging markets. Banks and other financial institutions often refuse to deal with unbanked people because considering them too risky and expensive to attract. The majority of the unbanked are people who don’t have credit histories and this is the main block for them to become the classic banks’ customers. However, I hope my company found the answer – the alternative way for people who can’t get access to traditional bank services might be built on new technologies.
MicroMoney, the company I’m managing, is a global digital credit bureau based on the blockchain technology. The company gives an opportunity for unbanked people to start from a blank slate meaning their empty credit histories. It also creates the way for banks, retail, and insurance companies to reduce financial risks when they work with this untapped audience.
In what way? MicroMoney has developed a mobile scoring system for rapid assessment of a client’s creditworthiness. Relying on Big Data, neural networks, and machine learning it has the functionality to approve the very first loans for unbanked people and this way creates their credit histories from scratch a hundred times cheaper than traditional banks. At the same time, financial and other companies get the access to this credit rating database on a fee basis, allowing them to receive a list of reliable and already assessed customers ready to consume their offers.
Now in our company and, I hope, everywhere in the nearest future, the unbanked person doesn’t need to collect a number of paper documents to confirm the ability to repay. He or she just installing the MicroMoney mobile app on a smartphone and completing a loan application within it. Then the scoring self-learning system analyzes the data available from the borrower’s smartphone and identifies potential credit risks with an accuracy of more than 95%. In a few minutes program makes a decision whether a loan should be approved or not, and sends money to a customer’s e-wallet if the answer is yes.
MicroMoney’s scoring system analyzes thousands of different parameters with the help of self-learning algorithms that can predict the outcome quite accurately. When a borrower allows access to the smartphone’s personal data, he or she does not just show us the information like contacts or SMS from banks about any transactions but actually lets MicroMoney come into the personal world. The system runs every piece of information through the neural networks: contacts, geolocation, favorite websites and searches, favorite music and all social accounts — more than 12 000 different parameters. Each parameter has its decreasing or increasing value for the final result. For example, having a profile in LinkedIn reduces the client’s risk by 30% but the love to hip-hop music, on the contrary, worsens creditworthiness. The longer a person fills in a loan application the less chance that he or she will pay it back. And so on.
Results of such analysis are much more important and reliable than the fact that a person has a credit history. This way all these alternative data help people outside the economic system to get their first (and tenth) credit ever and a further key to banking services because, finally, they will have a credit score! After a loan is approved, a customer receives the money in just several minutes. In countries like Myanmar and Cambodia, electronic wallet (e-wallet) is a very popular thing, where the account number is the same as the phone number, so the approved loan could be sent directly and immediately. That is one more reason why our lending services are valued so high in the Southeast Asia.
MicroMoney processed more than 95,000 unique customers already, got more than 500,000 likes on Facebook during the first two years of work. Nine customers out of ten took the first loan in their lives and 73% of these people came back for a new one.
Now MicroMoney operates in Thailand, Cambodia, Indonesia, Sri-Lanka, and Myanmar and the company has ambitious plans to enter 5 more emerging markets in the nearest months, including Nigeria and the Philippines. Now the company is going to run a token distribution campaign on 15th of October to support these business plans and to involve new streams of money from the untapped audience to the global economy.
About the Author: Anton Dzyatkovsky is the CEO and co-founder of MicroMoney.