More than 3 million customers in Africa who might not have been able to get credit from a bank have obtained products and loans through M-KOPA, a fintech company that serves the financially excluded.
While the idea is simple, advances in AI and machine learning on Azure have improved the business model for M-KOPA. The use of AI has helped M-KOPA achieve significant increases in customer repayment performance – particularly for the follow-on products and services that M-KOPA offers to customers once they have successfully repaid their initial loan, according to Owen Scott, the chief technology officer of M-KOPA.
“Tracking the health of our lending portfolio is an absolute bedrock competency of the organization,” says Scott. “We use machine learning models to forecast the repayment of every single loan in our portfolio – every single day. And that gives us very early signals on any changes in repayment patterns, which in turn helps us strike an important balance between inclusive pricing, financial responsibility and, ultimately, customer protection.”
With the entire operation running in the Azure cloud, Scott says, “we’re very deeply embedded in the entire Microsoft ecosystem.” In addition to Microsoft AI and machine learning, the company uses Azure Cognitive Services, Azure Kubernetes and Azure Cosmos DB. Supporting ‘financial resilience’
Founded in 2011 in Kenya, M-KOPA has expanded into Uganda, Nigeria and Ghana and is currently beginning operations in South Africa. By 2022, it had deployed more than $1 billion in credit with a focus on providing solutions that give people access to the digital world and help them financially in a way that is affordable and sustainable.
Nancy Sangoro, director of customer experience and retail at M-KOPA says, “Our mission is to make financing for everyday essentials affordable to everyone.” That financing gives M-KOPA customers access to essential products they need to improve their
lives, she says. “When I think about the challenges that a lot of customers face, I can group them into two. One is financial resilience … Most customers are incapable of dealing with unforeseen emergency situations. Through our upgrade products like health insurance, these customers are able to deal with unforeseen emergencies.”
Further, she says that M-KOPA has issued about 204,000 customers with health insurance policies. “The second challenge relates to access to credit,” she says. “Eighty-two percent of our customers have reported that by being able to access credit, they’ve been able to expand their businesses and grow their income investing the excess funds in essentials like food, rent and
education, which essentially improves their quality of life.”
For instance, Nicholas Njama, 44, a taxi driver in Nairobi, learned about M-KOPA at a critical moment in the fall 2022. His smartphone had broken, and he couldn’t afford to buy a new one. “I rely on my smartphone because many of my clients are in India and they need to be able to reach me for when they are here,” he says. “I was losing business.” “A friend told me about M-KOPA and I applied for a phone,” he says. The company requires an initial deposit, typically about 20% of the cost of the phone. “I couldn’t have gotten a loan from
a regular bank, and the payments were small enough.”
Njama, like many M-KOPA clients, stays with the company because it has become a trusted source of help to get ahead.
M-KOPA has been growing rapidly. And while part of M-KOPA’s mission is to help foster entrepreneurship, it also creates thousands of jobs. In Kenya alone, it has over 12,400 sales representatives and employees, many of whom are sales reps whose pay is based on
commission for finding new clients.