R/GA Innovation Exchange Spotlight: Meet Rafaela Cavalcanti of CLOQ
As part of our Inclusive Innovation series, we interviewed the female founders who participated in the 2019 R/GA Innovation Exchange with Kinship at the Cannes Lions Festival of Creativity. We spoke with Rafaela Cavalcanti of CLOQ about financial inclusion and giving capital to women. You can read more about her experience at the 2019 R/GA Innovation Exchange with Kinship here.
The era of stuffing money into a box hidden in a closet or a makeshift hole under a mattress is still very much alive and well for a global $1.7 billion population of individuals without bank accounts, the unbanked.
“There are a lot of people without bank accounts, and that can be for many reasons; one of the main reasons being that people do not trust banks. Therefore, people prefer to put their money in their wardrobes or under their mattresses instead of putting it into a bank.” said, Rafaela Cavalcanti, CEO of CLOQ.
CLOQ, a fintech solution, is on a mission to provide financial inclusion to the low-income and unbanked population by offering low-cost and accessible nano-loans within minutes, at any time, via their mobile app while educating them to make better financial decisions.
Rafaela founded CLOQ after experiencing first hand the impact of financial exclusion.
“I come from a poor neighborhood in Brazil in a city called Recife. My parents were small business owners and got robbed 17 times, going bankrupt after that. They could not get a loan from a bank anymore, so the only option after that was to get a loan from a loan shark,” Rafaela explains.
If you get a loan from a loan shark, you’ll pay about 7000% interest a year on a loan, and that was back when I was ten years old. Today, this hasn’t changed. The loan sharks are still there, but now they are just using business cards and websites in order to find new clients to take advantage like they did my parents back then.”
In South America, 51% of the population does not have a bank account. In Brazil, it’s one-third of the population. On top of that, only 7% of the people who do have bank accounts in Brazil, use the account for more than just deposits and withdrawals.
“Our focus is on the families who have a hard time making ends meet in case unexpected financial burdens come on their path. There are more and more low-income people that cannot access financial services. My co-founder and I want to use technology to upgrade traditional microcredit and support low-income and unbanked people in my own community, my country and eventually in the world.”
In CLOQ’s mobile app, users fill out a standard Know Your Client (KYC) form when seeking a loan. CLOQ then utilizes the data from the KYC form in conjunction with facial recognition and Optical Character Recognition (OCR) to verify the client’s identity.
On top of that, they use geolocation to aid proof of residence and developed their own proprietary credit analysis model to determine creditworthiness based on behavioral and public data. They also offer financial education within the app itself to allow their clients to break away from an endless loop of loans.
“Our credit analysis model is the most important thing in the app since we can not access financial data from our clients, and we also don’t have proof of income. We had to build something more realistic, and we do that with behavioral data combined with public and social data. In all, we are basically a platform; on the left side is the bank, in the middle is our platform and on the right is the client. We provide a bridge between them, where the bank profits from a new market that is now accessible with our credit analysis, and the client has access to better financial services.”
Two-thirds of CLOQ’s clients today are women between the ages of 25 and 45 years old. They mostly live in poor communities, and they have an income of about $200 a month, which is a little lower than the minimum wage in Brazil. Most of them have at least one kid, and the majority never finished high school.
“Banks think it’s risky to offer credit to people in the lower income population. What those people are left with are some organizations that offer microcredit, but it’s so difficult to get. It can take up to two or three weeks, so for any specific financial hardship; it becomes too late.”
According to the World Bank, women make up 55% of the worldwide unbanked population and in Brazil continue to be underserved when it comes to financial access at institutional levels. For CLOQ, they are the perfect target market.
“Research has shown that women are generally better payers. If you give capital to women, they are expected to help their families and improve their lives and their communities, because they care about the people that are close to them..”
The pursuit to offer people opportunities to better themselves and their livelihoods is ultimately what motivates Rafaela continue scaling Cloq’s efforts.
“I really love the feedback I’ve gotten from clients who’ve gotten loans. Clients would tell me, ‘thank God I got this loan,’ and it would the first time they’ve gotten a loan from a formal institution. Imagine being in my place and hearing someone thanking God that you helped them to get a loan. They pay us back too, and so far everyone that paid back a loan liked the process and used our services again. We are doing something good, and we want to help more people. Maybe even more people can be happy that someone is trusting them with the money they need in order to create a better life.”
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This year, R/GA Ventures partnered with Kinship, the newly launched ventures, technology, and business innovation arm of Mars Petcare, rebranding the program the R/GA Innovation Exchange with Kinship. The R/GA Innovation Exchange program extended its marketing and advertising focus to tech startups in the growing sphere of purpose-driven companies that can create positive change on a global or local scale.
To learn more and stay in the know, visit ventures.rga.com/studios or follow @rgaventures on Twitter.
