Alfredo Burlando on Digital Credit and Becoming a CEGA Affiliate

Financial Inclusion Program Associate Ale Wall interviews new CEGA Affiliate Alfredo Burlando on his research in Mexico and Uganda.

Alfredo at Opportunity Bank’s savings group workshop in Uganda (Credit: Alfredo Burlando)

Alfredo Burlando, Associate Professor of Economics at the University of Oregon, has the refreshing enthusiasm of a researcher following an exciting lead. Since he became a CEGA affiliate in July 2017, Burlando has received two awards from CEGA’s Digital Credit Observatory (DCO) to carry out innovative research on digital credit in emerging markets.

Digital finance isn’t uncharted territory for Burlando; he’s been working with Jessica Goldberg on a randomized controlled trial (RCT) in Uganda that examines borrowing constraints for informal savings groups. “We’ve been thinking for a long time about how to bring digital financial tools to these groups,” he reported in a recent interview. The DCO matchmaking workshop in May 2017 was an opportunity for Burlando and Goldberg to solidify some of their ideas.

Why Matchmaking?

CEGA matchmaking workshops are like speed dating for researchers — they put academic researchers face-to-face with potential implementing partners and donors to exchange ideas and plant seeds for potential research collaborations. The DCO workshop in May highlighted the many potential benefits and risks associated with digital credit in emerging markets, while giving researchers and digital credit providers the opportunity to bring related research questions into focus.

The DCO matchmaking workshop in San Francisco (Credit: Alexandra Wall)

Burlando recalled, “I came to the event with a simplistic view of digital credit, but after DCO Scientific Directors Joshua Blumenstock and Jonathan Robinson provided context and nuance, I realized how many different challenges need to be addressed. As a development economist, I have had many meetings with companies about research collaborations — it’s always been on their terms, in their offices. But at the workshop, the tables were turned: company representatives were able to relax a bit and take on the ‘student’ learning role. I also think they enjoyed hearing researchers debate about how to design rigorous studies.”

At the DCO workshop, Burlando connected with the Entrepreneurial Finance Lab (EFL)[1], a company that applies psychometric and behavioral insights to loan repayment. This gave Burlando an idea for a randomized evaluation in Mexico:

Slowing down digital credit

While many would agree that financial services should be designed to be as seamless and as frictionless as possible, Burlando recognizes that friction might actually be good for customers in some cases. In “Slowing Down Digital Credit,” joint with Silvia Prina and Mike Kuhn, Burlando is working with EFL Global in Mexico to assess whether introducing a short delay in loan disbursements forces customers into thinking more carefully about their use of the funds. He believes this type of intervention may have the power to boost repayment rates in a market where “there’s a clear problem with the ways loans are understood and repaid by consumers.”

A few months after the DCO workshop, Burlando was in Uganda completing fieldwork when he met with Innovations for Poverty Action (IPA) and UNCDF’s Mobile Money for the Poor (MM4P). During an hour-long conversation inspired by the upcoming DCO call for proposals, “another research idea was born.”

Milking for all it’s worth: digital credit and payments in the dairy sector

Burlando’s DCO-funded pilot study in Uganda, with collaborators Silvia Prina and Jessica Goldberg[2], will assess whether giving dairy cooperative farmers access to digital payments (besides credit) can boost take-up of Mo-Kash, a digital credit product offered by MTN Uganda. In addition to tracking product take-up, the pilot will measure the impacts of the loans and subsequent loan repayments on farmers’ production, income, assets, investments, and product prices.

Opportunity Bank, a partner on Alfredo’s banking savings groups project in Uganda (Credit: Alfredo Burlando)

While Alfredo has never taken out a mobile loan himself — “I really wanted to try the process but you need a Mexican ID!” — he is no stranger to mobile money. In 2008, while his wife was conducting graduate research on Ukara Island in the middle of Lake Victoria, hours from the nearest bank, he would transfer mobile money to her from where he was doing fieldwork in Tanzania. He recalled, “A van would travel around the island delivering cash. It was truly amazing! This made me very interested in digital finance and also aware of how big of an industry game-changer the partnership between a bank and a telecommunications company could be.”

CEGA is excited to welcome Alfredo Burlando into the CEGA network and looks forward to future collaborations. Stay tuned for more updates on Burlando’s research and the Digital Credit Observatory portfolio.

[1] In October 2017, EFL merged with Lenddo to offer a suite of credit scoring and identity verification products to more than 20 emerging markets.

[2] Silvia Prina and Jessica Goldberg also attended the DCO matchmaking workshop in May 2017.