With $1.4 million in seed funding from Formation 8 and the Khosla Impact Fund, Matt Flannery, co-founder and ex-CEO Kiva.org, an emerging markets nonprofit lending platform has launched Branch to take on banks in Africa, starting from Kenya.
According to Flannery, “Branch is a new way to access credit over a smartphone in emerging markets. Our mission is to deliver world-class financial services to the mobile generation. We believe that mobile technology presents an incredible opportunity for the world’s emerging middle class.”
Branch uses mobile data and trust networks especially digital connection as credit scores so the friends one has matters as well as how much they use for voice and data from their mobile network operators. Branch says it aims to bridge the financing gap to increase banking options and flexibility to allow its customers to pursue their dreams.
Though noble and founded by an very respected and experience micro-finance guru, Branch is not alone in the field which is even good for borrowers. InVenture’s Mkopo Rahisi founded by Shivani Siroya, is another modern credit for a mobile world where banking is broken.
Kenya’s CBA and Safaricom also have a similar product dubbed M-SHWARI which allows users to save and borrow. Recently the two firms said they have crossed the 10M customer mark. M-Shwari allows mobile owners to save and borrow directly from their devices without going to the banks and runs on a dynamic mobile phone based credit scoring system. CBA says it has extended loans amounting Kshs 29 billion, and has been processing an average of 50,000 loans per day over the last two years.
We don’t have the current transaction data from Inventure about M-KOPO Rahisi but the firm said in 2014 it issued over 6,000 loans and more than 75% of the borrowers went for a second loan. M-Kopo Rahisi uses real-time credit scoring which provides its users credit rating for what they need and when they need it. The company says most of its loans reach borrowers all over Africa and sign up and get loans in less than an hour.
Just as if that was not enough, KCB and Safaricom recently launched KCB-MPESA allowing users to borrow and even save according to the mobile data and voice usage and credit worthiness. The service claimed to have had 1M customers in just four weeks.
We haven’t tried out Branch but the firm says it works simply. You install the Branch App. Then when you log-in, you send Branch critical data that will be used in making a credit decision. By inviting friends to form trusting relationships within Branch, you increase your ability to access quick, fast loans. Once approved you can start to borrow and repay and Branch sends you your loan within 24 hours. Repay principal and fees over the coming weeks. Once your pay back a loan, you are eligible for larger, cheaper loans into the future.