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Hi, I'm a finance blogger who is interested in how different financial tools, including microfinance, can deliver real value to consumers.
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Currently a Master of Public Administration (MPA) student at Bowling Green State. University in Bowling Green, Ohio, USA. Specializing in International Development with focus on sub-Saharan Africa.
I work in Advertising Operations at Zillow, but LOVE microfinance. I'm always interested in startups, especially non-profits, reach out to me if you're working on anything cool!
Tala, formerly InVenture, is revolutionizing financial services in countries around the world by bringing credit scores to billions of people in East Africa, India and South Africa who not only don’t have one, but don’t have a mechanism to get one. These individuals may not be unbanked, but their countries have no system for them to measure their credit. This makes makes scalability and financial growth difficult: if you are a borrower, how are you going to build credit to receive larger loans as you repay off smaller ones?
From Tala’s website:
Anyone with a smartphone in our markets can apply for credit through the Tala app, which instantly evaluates a customer’s risk and capacity using only the data on their devices. More than 10,000 mobile data points go into Tala’s underwriting models, helping us score even those without formal credit or banking history and design products to match their lives.
The idea behind Tala is users download the application, and it pores through data in the phone to determine someone’s creditworthiness. The concept might receive some suspicious looks from privacy-hawks here in America, but I believe that my generation of 20-somethings have a completely different outlook on privacy than our predecessors. We not only willingly post pictures and posts that we’d never want our future employers/parents/kids to see, but we share those pictures far and wide. But I digress. My belief is, in America, the FICO score is an antiquated method of measuring someone’s creditworthiness. It is easy to damage, and difficult to revive, many Americans today struggle because of those 3 little digits. Interestingly, people across the world are fighting FOR a credit reporting system. Thankfully Tala is a data science company, that is using complex but practical, common-sense methods of credit evaluation.
From their website:
We’re a global group of user experience, growth, data science, and technology nerds with a relentless drive to open financial access in emerging markets. We like to move fast with purpose, and we value creativity and experimentation.
To give you an example of the business decisions that this data can trigger, here’s a quote from an article about Tala in Fast Company:
For example, are the majority of someone’s calls longer than four minutes? Good: They may have stronger relationships and be a better credit risk. And this is helping [Shivani] Siroya make the right bets.
Or here from the Wall Street Journal:
InVenture’s algorithms, for instance, found that users who wait until after 10 p.m. to make calls—when rates are lower—are lower-risk borrowers.
If you are like me, then you find this entire premise fascinating. You can actually see echoes of it here in America. Kiva U.S. has been exploring new methods of underwriting loans. Their website allows for any person to sponsor a borrower for a 0% interest business loan. Right in our own backyard, this is happening, and anyone can do it. Because let’s be real, it’s 2017; why should our financial independence be dictated by a 3-digit system invented in the 1970s?
Microfinance Institutions (MFIs) are community banks on the ground in developing countries. MFIs exist to provide small loans to people in surrounding villages, which makes covering their operating costs difficult. It is a struggle for many MFIs around the world to stay afloat. The proprietary technology that Tala has created effectively removes these operating costs, and relies on the smartphone that is in every Indian or East- or South-African person’s pocket to do the grunt work. The concept fuses finance and technology in a brilliant way.
Shivani Siroya, the CEO and Founder of Tala, is perfectly suited for this monumental task. She and her high-caliber team are making progress with their innovative use of smartphone data. Progress in this arena has the potential to dismantle years of cognitive bias that pervades everyday-people’s ability to function in the real world, whether it’s buying a car or renting an apartment. A graduate of the Ivy League system, Shivani has worked at investments banks as well as the United Nations before she decided to build a company that would then effectively build a role for personal credit in the developing world.
Tala is a social enterprise, and an amazing one at that. They are transforming how credit is used around the world. Muhammad Yunus popularized the notion that access to credit is a fundamental human right. Everyone should be given the opportunity to make something of themselves, to break free of the shackles of generational poverty.