Not Just a Number
Designing a product from the person up
We were in Nairobi when I met with a young shopkeeper, William, no more than 25, to talk about what he needed to grow his business. What I didn’t realize at the time was that William would be helping us grow our business.
I had been working on the issue of financial access in emerging markets for the better part of my career, observing the way that the current landscape — of abusive lenders and inaccessible banks and inconvenient microloans — just didn’t work for people. I knew there had to be a better way, and I wanted to put power in the hands of individuals rather than the system. There was a new class of customers, like William, who didn’t have formal financial identities but had nearly limitless financial potential — they just needed someone to take a risk on them. I thought that we could mitigate risk by proving their credit-worthiness through data.
This is why I started InVenture. Our first product was an accounting tool for feature phones that allowed customers to record their daily transactions through voice or SMS. From this, over weeks and months of data gathering, we built a non-traditional credit score. Banks would accept this score and allow new borrowers enter the formal economy.
We were meeting with William in Nairobi to introduce him to the product. He explained that he wanted credit so he could grow his business, and we talked him through how our product would help him do that. He was excited as we showed him the basics of how to use our program on his feature phone. We were in agreement about the opportunity this might afford him.
But as we parted, he said, “Ma’am, do you have an app for that? It would be so much easier.” And from his other pocket he retrieved an Android smartphone, explaining that this was the device he preferred using.
We were all surprised, though we shouldn’t have been. For the rest of the trip, we asked potential customers to show us all their phones, and learned that most had Android smartphones in addition to feature phones. We realized quickly that the transition from feature phones to Android was happening faster than expected.
And we realized, too, that William was on to something — that smartphones themselves were part of the solution. With a smartphone and all the data it collects about an individual’s life and transactions, we wouldn’t need our customers to monitor and record their daily activity, because their lives were already being mapped by their phones. What had previously been a long process on both ends could now happen in an instant. And we saw how, using the same bottom-up, people-first philosophy that had guided the development of our first product, we could create something that looked more like the credit cards we keep in our wallets than a traditional bank or microloan.
We wouldn’t need our customers to monitor and record their daily activity, because their lives were already being mapped by their phones.
This is how our product, Mkopo Rahisi, was born. Meaning “easy loan” in Swahili, Mkopo Rahisi is an Android app that with a user’s permission amasses more than 10,000 data points from the activity on a customer’s mobile handset: things like social networks, utility bill payments, mobile money transactions, browser history, even location data. We then take these seemingly scattered bits of data and add structure, creating a score that gives us a vivid picture of a person’s life and assesses their potential to be a good borrower. Our customers are approved for credit, on terms tailored specifically to them — all in under a minute.
We’re doing something else new, too: instead of giving this score to banks, we’re servicing the loans ourselves. This means a customer will get a loan delivered to his or her mobile money account, directly from InVenture, nearly instantly. Handling all customer service digitally keeps costs down and lets us help our customers wherever they are, at times that are convenient for them based on their mobile activity.
Since our app launched in Kenya last spring we’ve provided millions of dollars of loans to tens of thousands of customers. Our repayment rate is at more than 85% and more than 90% of our borrowers come back for a second, third, fourth, even fifth loan. And as our user base has grown, so has our data. We are continuing to evolve our credit scoring methodology based on the way our customers are living their lives — because, in the mobile world, we can. We also continuously customize borrowing experiences for each individual user in order to encourage successful repayment and further ensure they get credit that works for them. We update their score and our terms to reflect their shifting patterns and habits.
In the end, we have a score that looks more like a person and less like a number — a score that has helped us provide life-changing credit to thousands of deserving individuals in Kenya, and will help us reach millions more around the world. Our score is as alive and dynamic as the people it benefits, providing us (and our customers) with a critical advantage over traditional scoring models.
For example, we can see natural relationships in the data that often aren’t apparent in a paper trail. Just because a customer lives at home with a family doesn’t mean he’s more creditworthy than a single college student, but that’s how he would be evaluated by a traditional lending institution. Additionally, institutions will often deny credit to those associated with defaulters, or people who failed to repay a loan. But understanding individual circumstances, particularly in emerging markets, is critical for a fair evaluation. InVenture’s system allows us to take into account the underlying social structure of an applicant’s network instead of immediately rejecting her.
Our score is as alive and dynamic as the people it benefits, providing us with a critical advantage over traditional scoring models.
Our data scientists mine troves of data points to continually develop new and better ways of understanding our borrowers — our score is just another way we listen to them — and design a product that’s rooted in the real experiences of their lives. Our best reward is hearing the myriad ways our product is helping people, and learning all the ways that a simple cash advance can make a difference in someone’s life.
As we think about our next markets, I’m certain we’ll have more listening and learning to do, but we’re excited to continue expanding financial access to our current customers and to new communities. No matter where we take our product, we’ll remain committed to designing from the person up, ensuring that as many deserving people as possible can receive the kind of instant, flexible, and affordable credit that can dramatically change their lives for the better.