You might have already heard about Lending Club, Prosper, or OnDeck? In my initial understanding these online lenders offer loans more conveniently and with lower interest rates than a traditional bank, i.e., they provide access to credit to many who often have a light or no credit history. In 2014, USD 12 Billion loans were issued via online lenders representing only a fraction of the overall consumer and small-business lending market. But still! In addition, billions of USD of investment from hedge funds and other Wall street firms are flowing into These marketplaces , creating a seemingly endless capacity to extend more loans. An article in the New York Times, “Pitfalls of the Unwary Borrower Out on the Frontiers of Banking” on September 13, 2015 presents the potential dramatic negative impact these loans can have. Continue reading →
…this is at least the hypothesis of China’s largest peer-to-peer lending site. They have rated 50m Chinese consumers for creditworthiness using social networking and computer gaming data. i.e., if you spend a lot of time chatting on social networks or playing computer games, you might be helping your credit score.
The Financial Times launched an article “China P2P lender Banks on social media usage” which describes how China Rapid Finance has issued 3 Million P2P loans within 6 months with a credit Analysis that included a credit score based on consumers’ time and frequency on social media Websites. Continue reading →
Ok, ok, ok my article in the Microfinance Barometer is not a blog, but I still thought it might be interesting to feature it here. Digital Financial Services PLUS seem to be THE new thing in our sometimes a little odd world of access to finance. I had already written about DFS+ in Tanzania in an earlier blog, but hopefully the Microfinance Barometer 2015 will reach a lot more people.
For the 6th consecutive year, Convergences has published the Microfinance Barometer, in partnership with Fédération nationale des Caisses d’Epargne, The MasterCard Foundation, Caisse des Dépôts, the European Microfinance Platform (e-MFP) and Oikocredit. This annual publication contains up-to-date figures at world level and in France, analyses the major trends of the sector and takes a look at the new opportunities of microfinance in the countries of the global North and South. Continue reading →
After having introduced the topic of “bitcoin” and how it could potentially relate to microfinance or support digital finance in developing countries (I am still not convinced, but am happy to be convinced otherwise), I now want to let you know about an article written 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 →
As 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 →
THE 2015 BROOKINGS
FINANCIAL AND DIGITAL
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 →
I 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 →
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 →
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 →
This 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 →