Rajat Dayal, CEO, Yabx
In today’s interconnected world, access to financial services isn’t just a luxury; it’s a fundamental necessity for economic empowerment and social inclusion. Yet, for millions worldwide, especially in emerging markets like Africa, Asia, and Latin America, this access remains elusive. Traditional banking systems often fail to meet the needs of the underbanked, leaving them excluded from the formal financial sector.
Financial exclusion persists in many of these developing nations, with a significant portion of the adult population considered underbanked. Traditional players in the financial sector struggle to extend their services efficiently due to limited customer information and the high costs of credit assessment.
This lack of access to financial resources impedes opportunities such as starting businesses and traps generations in the cycle of poverty. One of the most pressing challenges facing underbanked communities is the inflexibility of the credit assessment process, with major players in the industry hesitant to adopt alternative data models.
Companies like Yabx are revolutionising the lending landscape by tapping into alternative data sources such as telecom data, social media activity, and transaction histories to assess creditworthiness and to help facilitate the distribution of life changing micro loans. Unlike conventional loans, micro loans typically have lower requirements for collateral and credit history, making them accessible to a wider range of borrowers, including those in remote or economically disadvantaged areas.
The impact of these fintech interventions is transformative. By providing easy access to credit, these providers are empowering unbanked customers and disbursing millions in credit, all without the need for physical branches or manual intervention, showcasing the scalability and efficiency of fintech solutions.
Emerging financial technology is able to offer transformative banking solutions by leveraging innovative data sources. This change can help to provide life-changing financial solutions to communities worldwide by improving access to banking. By utilising these new data sources, banks can expand the pool of eligible borrowers in underbanked areas.
Yabx’s approach, for example, has seen remarkable success in Africa, increasing the eligible customer base from 100,000 to an impressive four million, with over six million loans disbursed in just 12 months. Its holistic assessment incorporates diverse data points like utility payments and network usage patterns, providing a more accurate and inclusive representation of creditworthiness. By monitoring consumers’ behaviours and integrating credit bureaus, organisations can generate predictive views of financial habits, further enhancing scoring models. This comprehensive approach not only fosters inclusive economic growth but also contributes to sustainable development on a global scale.
