JUMO Group has come up with various ways in which they have gone about providing credit to entrepreneurs while partnering with banks who are still the largest lending institutions.
Entrepreneurs are a key part of many economies, especially in emerging countries. They drive development, create employment opportunities, and can improve the quality of our lives. It’s therefore imperative for them to have access to the resources and tools they need to prosper.
Improving access to financial services is one of the most significant ways we can create an enabling environment for business and entrepreneurship. Access to financial services promotes growth, reduces poverty and contributes to the building of sustainable economies. It also empowers people with the freedom to choose financial products that can enhance their lives or help them weather a storm.
The ability to receive credit, safely store or save money and easily make payments is essential to anyone wanting to start a business, expand their business or simply manage day to day living.
However, access to capital or credit to start or grow their businesses is still proving a challenge, particularly on the African continent where 67 percent of adults living in sub-Saharan Africa are unbanked.
JUMO’s Group Head of Partnerships Jade Longano, gave reasons why access to credit continues to be a challenge and how can we change it;
First is access to credit is restrictive for two main reasons. The first is physical access. The majority of financial institutions operate from bricks and mortar branches. In sub-Saharan Africa 58 percent of the population are based in rural areas making it either expensive or impossible to reach banks. However, JUMO gives access to mobile banking financial services through its platform, which enables an entrepreneur to access credit services and be able to fund his/her business.
The second reason is the limited availability of formal information. Informal traders seldom have bank accounts, proof of employment, or payslips to back their credit requests. This, however, should not preclude them from access to finance since, with the usage of alternative data points, combined with predictive analytics, JUMO is able to accurately assess a person’s propensity to repay a loan.
Currently, these data points can be applied to anyone who has a mobile phone and is connected to one of JUMO’s partner networks. This significantly increases the ability of previously excluded market segments to access finance.
Through experience and a growing body of data, JUMO has been able to use AI and machine learning to continually fine-tune predictive capabilities for stronger risk-adjusted returns and higher customer eligibility. In addition, positive repayment behaviour lowers the price of a loan.
Their advanced data engine runs machine learning algorithms on millions of mobile wallets, cellphone, and transaction data signals every second. Insights gleaned from this data are used to build increasingly accurate credit profiles for people in emerging markets.
These deep, data-driven insights have allowed JUMO to shape services and product features to suit individual entrepreneurs and their specific circumstances across countries such as Uganda, Zambia, and Côte d’Ivoire, Pakistan, Tanzania, Ghana, and Kenya. Capital providers and banks are then able to pass these benefits on to customers in the form of lower-cost loans.
How financial service providers see risk may also be a problem, but with the new ways of ensuring financial inclusion appearing every day, evidence shows that banks are, and will continue to be, the main financial contributors in enabling a more inclusive financial market, provided they can embrace the right technology and rethink credit.
In this regard, JUMO’s platform connects large pools of capital from traditional retail banks to customers they would not ordinarily be able to reach.
