OVERVIEW
Over the last few years governments, NGOs and to a lower extent the private sector, had all invested huge efforts and capital to provide the unbanked population in emerging markets with access to the formal financial system. The common belief is that financial inclusion will enable governments to remit funds to their citizens in a more safe manner, thereby reducing corruption and fraud. In addition to financial inclusion, the migration to digital payments will also enable individuals and businesses to transact in a manner that is both cheaper and safer, thereby promoting entrepreneurship and growth.
The growth in digital payments for the unbanked over the last 10 years has been phenomenal due to mechanisms such as mobile money in Sub Saharan Africa or government initiated projects in India such as Adhar, digital India and payment banks.
The next step in financial inclusion
While payments and savings are the natural first steps for the unbanked to enter the formal financial system, providing them with access to credit is the real driver for economic growth.
Credit enables individuals to invest in their education, health, and businesses, thereby improving their livelihoods and contributing to the economy.
However, providing credit to the unbanked is challenging due to the lack of traditional credit history and the high operational costs associated with serving this segment.
Collaborative Lending
Collaborative lending is a new model that addresses these challenges by bringing together different stakeholders in the financial ecosystem.
In this model, traditional financial institutions like banks and micro-finance institutions (MFIs) partner with mobile network operators (MNOs) and other digital platform providers to offer credit to the unbanked and underbanked.
By leveraging the reach and data of MNOs, banks can accurately assess the creditworthiness of borrowers and provide them with instant, mobile-based loans.
This not only reduces the cost of lending but also enables banks to reach millions of new customers who were previously excluded from the formal financial system.
The Role of Paretix
Paretix is at the forefront of the collaborative lending revolution. Our Advanced Credit Solutions & Intelligence provides the technology needed to manage the risk and automate the credit decisioning process for collaborative lending.
Our platform enables partners to:
- Seamlessly integrate and analyze data from multiple sources, including MNO data.
- Build and deploy advanced machine learning models that are specifically designed for the unbanked and underbanked.
- Automate the entire credit decisioning process, from application to disbursement.
- Continuously monitor and optimize credit policies and models.
By facilitating these partnerships, Paretix is helping to drive financial inclusion and economic growth in emerging markets around the world.