"So the problem solution lays in assessment. Scoring procedures. For the unbanked all the finance industry."
- it is interestingly... But maybe we need more details and informations about this scoring... if it is not patented algorithm
Topic: Not poor but still unbanked (Read 98 times)
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By Sai Hnin Aung, COO and co-founder in MicroMoney
About four years ago Worldbank discovered the new form of inequity — financial exclusion and explored and described a new financial category of people around the globe — the unbanked, people that have no access to the classical banking services. The first results showed that the majority (59%) of this population found in low- and middle-income emerging markets and lived on less than $5 per month. Since the market has the misunderstanding of the unbanked as of poor people. Unfortunately, the latest researches show that the problem is more serious and the unbanking status embraces much wider population categories.
A social lending services provider and a market first blockchain credit bureau MicroMoney started to work in the poorest regions of the Southeast Asia — Cambodia and Myanmar. Analyzing our customers, we found a surprising statistics. Yes, the nine out of ten MicroMoney’s clients take a loan for the first time in their lives proofing we have dealings with the unbanked people. However, at the same time, 75% of the MicroMoney’s clients have the monthly income of $200, while the average salary in these countries is $150. Many of the customers have families, a property sometimes, and a good regular job. 30% of our customers own a small business. So the reason of their unbanked status is not that they haven’t enough money to meet the bank’s requirements for deposits or loan applications.
Most of these people are still unbanked because they operate only with cash — receive a cash salary, make all business in cash, and have cash savings, which makes them not easy to assess and thus not enough profitable for classic banks. Most banks have high requirements for opening private bank accounts or approving credits, making it completely impossible for such people to get any financial services.
So the problem solution lays in assessment. For the unbanked all the finance industry need to do is to change the traditional but not working in this case scoring procedures.
Merriam-Webster dictionary contains several definitions of the word “credit”. One of them is “reliance on the truth or reality of something”. It is the one which people use to overlook when it comes to financing industry.
The classic banks and financial organizations firmly stand on their old school point of view, protecting traditional model of creditworthiness assessment. They often require a pile of documents and certificates, a collateral, a person to vouch, not to say about precious time, which potential borrower are forced to spend collecting those documents and waiting in the queues even not being sure that the loan will be approved.
Changing the very approach to the access of the potential borrower, MicroMoney follows the definition of the word “credit”. All that customers need to get the approval for the loan application, is to install MicroMoney app on the smartphone and agree to provide an access to their personal data. Then follows the work of the company’s know-how, the scoring system based on AI algorithms, machine learning, and Big Data analytics tools. It is not the credit manager who assessing borrowers’ credit rating but all the information available from a mobile phone — where a customer lives, works, how he or she spends money, what a customer like and how reliable he or she is. Scoring system thoroughly analyzes more than 10,000 parameters and with 95% accuracy predicts whether a customer will repay a loan in time or not. And no need in papers, certificates, and office visits.
It is important to understand that no business can survive in the modern economy without the strong social mission. MicroMoney is following its ambitious goal — to bring all who are deprived of financial services, to the global financial system.
Using the extra money to improve their lives, clients gain confidence in financial support, which comes quickly when an urgent situation occurred. Step by step both sides get more mutual trust. 73% of people who had taken the first loan take the second one. 34% of our clients borrowed money five or more times, 7% take ten and more, and 4% take loan fifteen or more times. The more loans were taken, the more amount of money client can get.
The new era is coming, the era of the reliance on the truth, when everybody will be trusted not for the time that they need to spend collecting paper-based proofs but for the time they already lived. The lifetime reputation is the key to digital reputation, the social loans are the reliable financial tool for the reliable consumers who want to improve their standards of living, to take a worthy place in the world’s financial system.
By Sai Hnin Aung, COO and co-founder in MicroMoney
About four years ago Worldbank discovered the new form of inequity — financial exclusion and explored and described a new financial category of people around the globe — the unbanked, people that have no access to the classical banking services. The first results showed that the majority (59%) of this population found in low- and middle-income emerging markets and lived on less than $5 per month. Since the market has the misunderstanding of the unbanked as of poor people. Unfortunately, the latest researches show that the problem is more serious and the unbanking status embraces much wider population categories.
A social lending services provider and a market first blockchain credit bureau MicroMoney started to work in the poorest regions of the Southeast Asia — Cambodia and Myanmar. Analyzing our customers, we found a surprising statistics. Yes, the nine out of ten MicroMoney’s clients take a loan for the first time in their lives proofing we have dealings with the unbanked people. However, at the same time, 75% of the MicroMoney’s clients have the monthly income of $200, while the average salary in these countries is $150. Many of the customers have families, a property sometimes, and a good regular job. 30% of our customers own a small business. So the reason of their unbanked status is not that they haven’t enough money to meet the bank’s requirements for deposits or loan applications.
Most of these people are still unbanked because they operate only with cash — receive a cash salary, make all business in cash, and have cash savings, which makes them not easy to assess and thus not enough profitable for classic banks. Most banks have high requirements for opening private bank accounts or approving credits, making it completely impossible for such people to get any financial services.
So the problem solution lays in assessment. For the unbanked all the finance industry need to do is to change the traditional but not working in this case scoring procedures.
Merriam-Webster dictionary contains several definitions of the word “credit”. One of them is “reliance on the truth or reality of something”. It is the one which people use to overlook when it comes to financing industry.
The classic banks and financial organizations firmly stand on their old school point of view, protecting traditional model of creditworthiness assessment. They often require a pile of documents and certificates, a collateral, a person to vouch, not to say about precious time, which potential borrower are forced to spend collecting those documents and waiting in the queues even not being sure that the loan will be approved.
Changing the very approach to the access of the potential borrower, MicroMoney follows the definition of the word “credit”. All that customers need to get the approval for the loan application, is to install MicroMoney app on the smartphone and agree to provide an access to their personal data. Then follows the work of the company’s know-how, the scoring system based on AI algorithms, machine learning, and Big Data analytics tools. It is not the credit manager who assessing borrowers’ credit rating but all the information available from a mobile phone — where a customer lives, works, how he or she spends money, what a customer like and how reliable he or she is. Scoring system thoroughly analyzes more than 10,000 parameters and with 95% accuracy predicts whether a customer will repay a loan in time or not. And no need in papers, certificates, and office visits.
It is important to understand that no business can survive in the modern economy without the strong social mission. MicroMoney is following its ambitious goal — to bring all who are deprived of financial services, to the global financial system.
Using the extra money to improve their lives, clients gain confidence in financial support, which comes quickly when an urgent situation occurred. Step by step both sides get more mutual trust. 73% of people who had taken the first loan take the second one. 34% of our clients borrowed money five or more times, 7% take ten and more, and 4% take loan fifteen or more times. The more loans were taken, the more amount of money client can get.
The new era is coming, the era of the reliance on the truth, when everybody will be trusted not for the time that they need to spend collecting paper-based proofs but for the time they already lived. The lifetime reputation is the key to digital reputation, the social loans are the reliable financial tool for the reliable consumers who want to improve their standards of living, to take a worthy place in the world’s financial system.
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