MICROCAPITAL BRIEF: FINCA, First Access Partner in Africa on Alternative Credit Scoring, Incorporating Mobile Phone Usage

FINCA Microfinance Holding Company, an arm of US-based nonprofit microfinance network FINCA International, and First Access, a US-based financial technology company, recently partnered to create an alternative credit-scoring system to serve the Democratic Republic of Congo, Kenya, Malawi, Nigeria, Tanzania, Uganda and Zambia. This system aims to “establish credit scores for low-income clients who lack sufficient formal credit history to secure small loans to build businesses or support emerging personal needs.” Specific information on exactly how this system works is unavailable, but First Access typically analyzes demographic, geographic, financial and social aspects of clients’ mobile phone usage to predict credit risk.

Andree Simon, Co-CEO of FINCA Microfinance Holding Company, said, “This partnership gives FINCA more objective information to form a credit decision and more time to improve the quality of our relationship with our clients. This should minimize the risk of our overall portfolio, lower underwriting costs, increase the speed of loan decisions, expand the pool of eligible borrowers and ensure they get the guidance they need to borrow safely and successfully” [1].

As of December 2014, FINCA International had total assets of USD 1.25 billion and served 1.8 million clients through subsidiaries in 23 countries. As of the same time, it reported return on assets (ROA) of 0.6 percent and return on equity (ROE) of 2.5 percent. This is the most recent financial information available as of May 2016. First Access, which has 14 employees as of 2016, has not released its financial information.

By Jason Wei, Research Associate

Sources and Additional Resources

About FINCA International

The Foundation for International Community Assistance (FINCA International), a nonprofit microfinance network based in the United States city of Washington, DC, provides financial services primarily to women living in Latin America, sub-Saharan Africa and Eurasia. The organization was founded in 1984 by Dr. John Hatch, who is known for helping develop “village banks” in which each member guarantees the loans of other members. As of December 2014, FINCA International had total assets of USD 1.25 billion and served 1.8 million clients through subsidiaries in 23 countries. As of the same time, it reported return on assets of 0.6 percent and return on equity of 2.5 percent. In 2011, FINCA launched a subsidiary, FINCA Microfinance Holding LLC, with equity participation from the International Finance Corporation (IFC), KfW Bankengruppe, Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), responsAbility and Triple Jump. FINCA International runs most of its operations through FINCA Microfinance Holding LLC and retains a majority stake in that entity.

About First Access

First Access is a technology company founded in 2011 that is headquartered in the US city of New York. The company offers a mobile software-as-a-service business model that analyzes demographic, geographic, financial and social aspects of clients’ mobile phone usage to predict credit risk for borrowers in informal markets. First Access’ customer base includes retail commercial banks, microfinance institutions, insurance companies, agricultural input suppliers and payment platforms. First Access, which has 14 employees as of 2016, has not released its financial information.

[1] FINCA and First Access Announce World’s Largest Microfinance Fintech Collaboration, http://fmh.finca.org/news/finca-and-first-access-announce-worlds-largest-microfinance-fintech-collaboration/

MicroCapital Universe Profile: FINCA International

MicroCapital Universe Profile: First Access

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