As excited about alternative data?

EFLAs you might remember, I wrote two blogs about alternative data, as an effective way to better score people with no or only a small credit history. One was “Psychometrics in credit Analysis – threat or promise?” where I reflect on a presentation by the Entrepreneurial Finance Lab (EFL), a US alternative credit scoring company spun out of Harvard University. Please find a one pager on EFL and on their products. The other one was “A US study: Utility and telecom payment data predict loan repayment capacity!” Since my time at CGAP I think the topic is super exciting and opens a lot of doors to significantly increase well-structured lending to low-income population segments.

To remind everybody: EFL uses psychometric data to develop credit score creating creates a deep quantitative understanding of individual risk and opportunity in small business (MSME) and consumer financing. Continue reading

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The 2015 Financial and Digital Inclusion Project Report – Are commitments enough?



We all know that an increasing number of developing countries are committing towards clear goals with regards to financial inclusion. For example, in May 2015, 54 institutions across 61 countries have signed the Maya Declaration on Financial Inclusion proving their recognition of the importance of financial inclusion, affirming the power of peer-to-peer knowledge sharing, expanding the Alliance of Financial Inclusion networks, developing a financial inclusion policy, implementing sound regulatory frameworks, recognizing the importance of customer protection, and using data to track progress towards financial inclusion.


The Center for Technology Innovation at Brookings has launched the 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which evaluates access to and usage of affordable financial services across 21 countries which have recently made commitments to financial inclusion and reflect political, economic, and geographic diversity. Continue reading

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Bitcoin – What is it and if yes, how many?

bitcoinI normally write about microfinance, but I guess we have to go with new trends and new developments. Bitcoin is definitely one very new, innovative, and potentially even tension-generating development in the global payment industry.

This is primarily an introduction to another blog I wanted to write about Bitcoin and how regulation is advancing in Luxembourg, .However, the topic is fairly complicated and I wanted everybody to understand well what Bitcoin actually is before I tell you about how to regulate it. So… to make things short: this blog provides the definition of Bitcoin and how it relates to Microfinance or to electronic money. A following blog in the coming days will be on a recently published article by Jean-Louis Schiltz, a guest professor at the University of Luxembourg and legal advisor to several virtual currency companies (since his first involvement with bitcoin through MIT Media Lab, in which he examines whether it is possible for one place to emerge as the world’s bitcoin hub and whether regulation will have a hand in this. Continue reading

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My contribution to the MicroSave Blog on Digital Finance in DRC:

Please find below a blog which I wrote for the MicroSave blog on digital financial Services (DFS) in the DRC. I was and still am very excited to have been offered the opportunity to contribute to the MicroSave blog which I consider to be one of the most informative, asking great questions, contributing to real discussion (which you can join on LinkedIn), and helping me a lot to stay in touch with the developments in DFS without necessarily having to be on a plane all the time.


Thoughts on DFS in “Europe Minus Infrastructure” – DRC!

Europe minus infrastructure”? This was the term that James Mwangi, CEO of Equity Group, used in an Equity Group briefing when describing and explaining Equity Banks’ move into DRC by purchasing ProCredit Bank Congo. Continue reading

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The customer experience – making or breaking your DFS Business model!

Study by BFA and MicroSave, commissed by CGAP

Study by BFA and MicroSave, commissioned by CGAP

It sounds obvious that people using digital financial services (DFS) will stop using the services if their confirmation sms does not arrive, if they do not know if their money has been transferred or their utility bill has been paid.

CGAP has now commissioned MicroSave and BFA to examine the risks that consumers are exposed to with DFS which can significantly reduce the profitability of the service, affect users trust and perception, but also uptake and usage. The research was done in four countries (Bangladesh, Colombia, Philippines, and Uganda) primarily for their maturity and different market profiles. Sample sizes were fairly small since the studies were not supposed to be nationally representative. Continue reading

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Cash is “coined freedom” for Germans

A German EUROThis citation by Fjodor Michailowitsch Dostojewski is very much in line with Germans resilience to move towards electronic payments.

I was already wandering why electronic payments were always such a hassle in Germany. Small retail transactions are almost never (only in 20% of cases) paid via electronic means. The old lady in front of you will be counting her cents to EUR 4,26 and when reaching EUR 4,24 she will realize that she will have to pay with a EUR50 bill which the cashier cannot change. ARGH!

The Frankfurter Allgemeine Zeitung (FAZ) sacrificed two articles on June 1 regarding the Topic (“Warum haengen wir so am Bargeld” and “Deutsche wollen ihr Bargeld behalten“) Continue reading

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Breaking news: ProCredit exitED Africa!

PCBCI am not sure if all of you remember my blogpost “Is ProCredit exiting Africa” in September 2014. Up to today this was my most-read blog which also stirred up many of my former colleagues and bosses at ProCredit Holding in Frankfurt. Well, at least one needed to ask the question which was an obvious one after having sold Angola, Sierra Leone, Ghana, and Mozambique. The only African ProCredit bank left at that point was the one in the Democratic Republic of C which I had been working for from 2008 to 2011. In December 2014, the topic became interesting once gain and I wrote “Twenty Little ProCredits…..”   talking about the first Latinamerican ProCredit Banks which had been sold to their Latinamerican competitors. Well, I guess now my horror became reality:

ProCredit sold its last African bank. Continue reading

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A US study: Utility and telecom payment data predict loan repayment capacity!

ount Delinquencies with  Utility and Telecom  Payment Data

Account Delinquencies with 
Utility and Telecom 
Payment Data

I still remember my times at CGAP when the Technology Team was working with PERC, a research center and advocacy group working on:

reducing credit invisibility, ie., “credit invisibles” without credit data are most often rejected by mainstream lenders using automated underwriting systems;

abolishing the “credit catch 22″, i.e., mainstream lenders rely on credit reports to assess credit risk and to extend a loan, plus credit bureaus only have data on the already banked population. In this dynamic to qualify for a loan, you will already have to have credit.

pointing fingers at alternative data which presents a wealth of data that could be used to drive financial inclusion. If it can be accessed, it could dramatically increase access to financial services for low income persons worldwide. Continue reading

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Tanzania, are you ready for Digital Finance PLUS (DF+)?

Framework developed by CGAP in partnership with McKinsey.

Framework developed by CGAP in partnership with McKinsey.

Everybody wants to be digital finance ready! My last blog on the EIB diagnostic of 7 markets in Africa and their potential readiness to replicate Kenya with its Mpesa story already launched this topic. The same day, CGAP launches its blog post “Which Markets are Ready for Digital Finance Plus?”. But here we are talking about something slightly different than just digital finance. CGAP is talking about ”Digital Finance PLUS”.

What is digital finance plus (DF+) ? CGAP defines this as businesses using financial innovation to reach poor people with essential services and which are impacting not only financial inclusion, but are also making it easier and more affordable for poor people to get access to essential services they formerly lacked, such as energy and clean water. Another term used here in Luxembourg sometimes would be impact investing where it is not only about the onlending, but also about access to health or education. In very easy terms, it might be a financial products, e.g., a loan that helps the poor buy solar panels, i.e., get access to electricity. Continue reading

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Can we have another Mpesa? – a study analyzing 7 African markets

Digital Financial Services in Africa: Beyond the Kenyan Success StoryThis blog has been long overdue. The European Investment Bank (EIB) together with the UN Capital Development Fund (UNCDF) launched a study in December 2014 on digital financial Services (DFS) in Sub-Saharan Africa, notably Benin, Cameroon, Kenya, Mozambique, Nigeria, Senegal, Uganda and Zambia.

The objectives of the study was to assess the key success factors from Kenya which is known globally as the DFS success story and how these success factors compare to what is found in the other seven markets of the study, and how lessons from Kenya could be applied to expand DFS in these 7 markets. Evidently for the EIB, the main purpose was to find potential investment targets to further financial inclusion. Continue reading

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