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Alternative Credit Scoring and Its Role in Financial Inclusion Webinar

On 30th January 2019, Mastercard Foundation Fund for Rural Prosperity held the first in its 2019 series of themed webinars, aimed at sharing insights and learnings from its portfolio of projects, and from invited speakers.

The webinar was attended by 45 participants including participants in the Fund portfolio, the Foundation, interested parties from the private and public sector, and other Fund partners. The session focused on alternative credit scoring and the role, challenges and opportunities around alternative data in financial inclusion, particularly in the context of smallholder farmers.

The Fund perspective:

The webinar kicked off with Wambui Chege, Team Leader, Mastercard Foundation Fund for Rural Prosperity highlighting the Fund’s mandate and vision, the impact the Fund is seeing after a little over 4 years in operation, and showcasing the makeup of credit focused companies in the portfolio (particularly those involved in alternative data models). The Fund is already meeting its initial target of one million users of some 66 financial products and services through the 38 companies under its portfolio in Sub Saharan Africa. 78% of the projects offer some form of credit to customers.

What is Alternative Credit Scoring, what kind of data points are relevant and how?

Howard Miller, an experienced alternative data and rural finance consultant representing Nathan Associates, spoke about the challenges of lending to smallholder farmers at pre-loan, post-loan and the loan decision making stages, and how digitization and new data streams are helping overcome some of the challenges. Howard also spoke about what credit scoring does and its uses in addressing various lending criteria, finally discussing types of data including traditional data, transactional data, agricultural data and remote sensing data and their relevance to lending criteria.

One Alternative Credit Scoring model doesn’t fit all: Kilimo Booster and its self-implemented approach.

Juliet Ongwae, Chief Innovation Officer at Musoni Microfinance then proceeded to explain alternative credit scoring in the context of the company’s Kilimo Booster product. This innovative project supported by the Mastercard Foundation Fund for Rural Prosperity, saw Musoni embrace alternative credit scoring, and build internal capacity and systems to collect and manage data. The project provided many insights including the critical role of the right partnerships, having a tech-enabled model and importantly maintaining a high touch despite high tech for credibility and relationship purposes.

Core Alternative Credit Scoring lessons to take on board: The First Access experience and the need for a digital mind-set.

Nicole Van der Tuin, Co-Founder and Chief Executive Officer of First Access, a Fund supported project, was the final speaker. Nicole talked to a reality that agricultural lending is one of the most difficult to get right and the need for a data driven mind-set from the start. She introduced the First Access software platform that helps financial institutions use data to reach customers faster, and recommended key best practices based on the First Access experience, for a data driven future. A conclusion derived from this session was that incremental change is more profitable (less expensive and lower-risk), but it requires flexible systems and relentless focus on sustainable growth.

References:

To review the PowerPoint presentation made during this webinar click here.

To listen audio recording of this webinar (MPEG-4 Audio) click here.

The Fund extends its appreciation to all presenters particularly Nathan AssociatesMusoni Microfinance and First Access, as well as all participants on this webinar. More webinars will be announced in the near future via this website or email.