Delivering world-class financial services to emerging markets

Trinity is proud to lead the Series B for Branch International, a company modernizing finance where it’s needed most.

Photo courtesy of Branch International

Access to capital is a basic human need. It allows us to purchase goods for today and to save for tomorrow — essentially to build the foundations of our livelihoods. Yet for millions in emerging markets, access to capital through basic financial services like credit, savings and payment and transaction processing remain out of reach.

Branch International intends to change this. Already the most popular finance app in Africa, Branch offers credit to mobile users in Kenya, Nigeria and Tanzania, with plans to expand to India. They process tens of thousands of loans every day and have extended credit to nearly one million cumulative borrowers. The company is growing 20% month-over-month and is on track to lend over $250 million in 2018. And this is just the beginning — their technology, data, reach and impact will only improve.

Branch International CEO Matt Flannery

Before co-founding Branch, CEO Matt Flannery spent a decade building up financial services expertise and on-the-ground emerging markets experience as co-founder and CEO of the microfinance pioneer Kiva. Branch’s all-star team has an extremely rare and impressive combination of technical depth in data science and finance, coupled with extensive local market knowledge. Leveraging their unique qualifications, Branch is tackling a financial services landscape that is painful and largely inaccessible and making it so seamless and convenient that users can access it from their pockets.

According to a March 2018 report from McKinsey, 2 billion people and 200 million small businesses in emerging markets lack access to savings and credit, and technology-led financial services firms have the potential to acquire 1.6 billion new retail customers and grow individual and business loan volumes by $2.1 trillion. Two trends are creating the opportunity to address this massive, under-served market: the availability of technology capable of addressing the need, and the availability of a platform able to deliver it.

The rise of the smartphone

In Africa and India, smartphone adoption is accelerating at 14 to 17 percent. GSMA Intelligence predicts that there will be more than 400 million new smartphone connections in Sub-Saharan Africa by 2020, bringing the mobile install base to more than half a billion users.

In the US, widespread availability of smartphones has enabled many financial services to become seamless. Today, we can complete increasingly complex financial transactions on our mobile devices that were previously only possible at physical banks. In many emerging markets, frictionless financial transactions are now becoming a possibility thanks to the growth in mobile usage. These markets are leapfrogging the traditional banking infrastructure of decades past and benefiting from today’s state-of-the-art technology.

Improvements in data science

In the US, credit ratings companies have been around for nearly 200 years. As subjective and even at times alarming and discriminatory some of the practices have been, they have nonetheless facilitated many Americans’ access to credit. In East Africa, there’s no comparably rich credit infrastructure. Only some credit bureaus exist, and the few that do exist lack reliable data. Furthermore, the data that is available excludes much of the population.

Branch is creating credit from scratch, in some markets building both the bank and the credit bureaus. Collecting data on user behavior gleaned from texts, calls, contact lists and GPS data, among other inputs obtained with permission from users, Branch utilizes data science to analyze these inputs to evaluate risk. Their Android-based app then approves loans ranging from $2.50 to $500. Branch’s rapid learning engine keeps default rates low, enabling them to disburse the right types of loans to the right people, despite a total lack of credit data previously available on those users. The dataset Branch is building is the richest credit data ever built in many of these markets.

Photo courtesy of Branch International

Branch’s application of leading-edge machine learning to financial services addresses a huge untapped market need. In my opinion, this same technology would have far less market potential in the U.S. In America, there are decades of data to power financial decisions, so incremental improvements in data science wouldn’t sufficiently move the needle for fintech startups, given their other competitive disadvantages relative to the big banks. However, in Branch’s target markets, the delta between the quality of data available today and the quality of the information that can be extracted from that data with data science is simply massive.

I’ve spent a lifetime in fintech, and I’ve sought to use that experience to positively impact consumers. Fintech is at its most powerful when it’s applied to the people who need it most. At Trinity we’ve spent a lot of time thinking about where tech and finance can intersect to address big problems in a sustainable, commercially successful way.

I’m blown away by Branch’s technology, their all-star team, their massive potential and their already realized impact. We’re proud to be supporting Branch as they extend world-class financial services to emerging markets around the globe.

For more on the announcement, read Connie Loizos’ piece in TechCrunch and our press release.