Articles

Machine Learning Meets Credit Scoring: How it Can Help Reduce Loan Delinquency Costs

In a previous analysis, we laid out the machine learning process we conducted for Destacame.cl, an investee of the Catalyst Fund, which provides alternative credit scoring to underbanked consumers in Latin America. For a firm like Destacame.cl, the investment in predictive algorithms for credit scoring is a no-brainer. It is an inherent part of their digital product and data-driven business model, and can be seamlessly incorporated.

Articles

Articles

Bring momentum in SME financing for inclusive growth
The aggregate increase in per capita income of a country does not necessarily ensure poverty reduction, particularly in a developing economy like Bangladesh. According to the World Bank data, the per capita income in the Dominican Republic between 2000 and 2010 increased 3.62 percent and the poverty indices rose 2.07 percent. In Egypt, the per...
Assessing the Fintech Digital Gameboard
Two weeks ago I wrote about the position of strength that banks are operating from in their Fintech relationships . But, many banks are failing to take advantage of what Fintechs offer. Too often, banks pursue an incremental approach, addressing specific one-off problems rather than considering their own and their customer’s digital needs more...
Looking for African solutions to the SME financing gap
Unrealised growth potential and positive demographics continue to make Africa an attractive long-term investment destination, despite the SME funding gap. Africa has 400 companies with more than $1bn in revenue and 700 companies with more than $500m in revenue. Over the past five years, debt transactions totalling $110.2bn have been placed in...
Open Sesame! Give Me Some Credit
In the story of Ali Baba and the 40 Thieves, the magical word “sesame” was used to open the seal of a cave where Ali Baba found hidden treasure. In China today, the same word is connected to another kind of magic, one that reveals hidden identities of the socially and economically disadvantaged. Sesame Credit (“芝麻信用” in Mandarin) is a product...
Banks and their partners need to face up a set of realities to manage successfully
Sometimes it is valuable to rethink basic assumptions and hopes to consider the reality of working within a bank or credit union. Example: Small Business. The small business segment offers exceptional economic value to banks. We work with one small business-focused bank whose customers provide deposits that exceed loans by 5X. That allows the bank...
External financing - should SMEs take the leap?
The UK’s rapidly expanding small business sector is something of a sleeping giant, with young companies in need of better access to finance to kick-start their growth. Early-stage start-ups are reasonably well catered for in the funding stakes, but as they reach the development capital stage – with a viable, revenue- generating concept and a clear...
Small business, big attraction: Can small business banking be personal?
Small businesses have long mystified banks. They make up an overwhelming 99 percent of all businesses—yes, 99 percent—and employ close to half of all workers. They generate more than 60 percent of the private sector’s net new jobs. Yet despite the critical role small businesses play in the economy, most banks struggle to generate strong returns...
The Deserving Under-Served – Shifting the Focus for Banks
The world of banking has remained unchanged for decades; when all about them were innovating and disrupting their sectors various, the bank did nothing, managing to continue its unilateral conversation to its one customer. The middle-aged man. The banking sector has done itself no favors by eliminating the woman from their branding strategy; this...
SMEs Access to Capital Markets in India
It took almost a decade since the SME Exchange has been formalised to see 60 floats in a month. Still the total number of listings on the SME bourses is not something that the growing Indian economy can be proud of. In India, most SMEs operate in debt markets. Cost of raising debt for SMEs is increasingly becoming problematic both from the points...
Access to finance, a challenge for SMEs in Fiji
This week the Fiji Export Council (FEC) sheds light on a major challenge faced by small medium enterprises (SMEs), which is access to finance. After reviewing workshops and seminars conducted by the FEC over recent years on export readiness, one of the biggest challenges for development raised by SMEs in Fiji is the availability of finance...