2016 1 Star Sponsor & Exhibitor
Established in Bulgaria in 2011, Cash Credit is a fintech company with a sophisticated, in-house developed, credit scoring methodology based on behavioural analytics, that mines mobile network operator (“MNO”) data to qualify customers for micro loan eligibility. To-date, Cash Credit has disbursed approximately US$50m in micro loans of US$350 average size. The Company has achieved continued improvement in recovery rates, currently as high as 93.4% through sophisticated self-learning algorithms.
The Company enters new markets through MNO partnerships, mining their subscriber data in order to identify, score, pre-select and reach eligible customers. Through white-labelling, Cash Credit embeds its micro loan offering in the mobile operator’s product portfolio through their channels. The business model is based on a revenue share arrangement under long-term contracts, currently in place with each of MTN South Africa, MTN Cameroon and PLDT / Smart Communications in the Philippines. The cost-effective nature of Cash Credit’s business model, including lower subscriber acquisition costs, translates into lower interest rates for its customers and higher number of approvals for its growing loan book. The model was initially proven in Bulgaria with Globul (Telenor) and Mtel (Telekom Austria), since diversifying into new distribution channels including digital, online, direct retail and third party distributors.
Cash Credit’s unique scoring methodology uses >200 MNO variables to detect patterns that provide high predictability of individuals’ credit worthiness. The know-how to assess, in a completely unique way, an individual’s willingness, affordability and ability to repay a loan, is the cornerstone of the Company’s methodology. Clever boasts a GINI coefficient of >60% on new customer scorings versus the wider lending industry standard of ~30% and micro credit standard of just ~15%. The proprietary technology is iterative, automatically ‘learning’ based on customer behaviours and repayment feedback, thus continuously improving its predictability of loan loss metrics. Cash Credit’s risk assessment of potential customers is based on scoring of MNO data and is further enhanced with additional sources of information such as social media, transactions, payments etc. where available.
Market Opportunity & Impact
Lack of access to finance is the single largest barrier to economic growth across emerging markets. Africa is home to hundreds of millions of under-banked consumers, sole-traders, SoHos and SMEs, due to: i) inadequate financial infrastructure to reach potential customers; ii) lack of credit history or collateral, both of which are necessary for traditional banking; iii) limited traditional data on which to assess credit worthiness; and iv) no methodology or experience to work with non-traditional data sources. This market, partly served by informal lenders, nonetheless uses MNO services daily, allowing Cash Credit to credit score and extend loans to them. Cash Credit’s solution addresses all four key impediments above, thereby facilitating true economic and financial inclusion.
2016 1 Star Sponsor & Exhibitor