Catch-22 for the Unbanked: how can two Billion People find the way to the Global Economy?
By Charles Davidovich
“The Catch-22” is a paradoxical situation from which an individual cannot escape because of contradictory rules. The Catch-22 of modern banking is that if you need a credit, you need a credit score, and to get a credit score you need a credit.
Logically enough, banks have to spend hundreds of dollars to scrutinize potential client’s creditworthiness. For example, in US banks pay $200–300 of operational costs, in Asia – $100–150 for one loan approved, and wasting money is not what they want. People who can not escape the endless circle “credit vs credit score” are called “unbanked”.
According to the McKinsey, two billion individuals and 200 million micro, small, and midsize businesses on emerging markets today lack access to savings and lending service, and even those with the access have a limited range of financial products.
How to Reach the Unbanked
It’s not like banks do not put efforts to assess the unbanked client’s creditworthiness at all. Many financial companies learned to use alternative ways to explore it. For example, in the UK a bank during mortgage availability assessment can examine all of your purchases and check-ins in pubs within the year to determine your alcohol expenses.
In Mexico, Banco Azteca sends its agents to the homes of borrowers to take an inventory of stereos, TVs and other appliances they possess to support their loan application. Sesame Credit, a rating company run by Alibaba, sees over 400m active users a month and relies on users’ online-shopping habits to calculate their credit scores.
These observations lead to the conclusion that someone playing video games for ten hours a day might be rated a bad risk; a frequent buyer of nappies would be thought more responsible. Therefore, any software solutions that are able to accumulate and analyze information from all these additional sources are predictable for fintech market.
McKinsey used its proprietary general equilibrium macroeconomic model and detailed inputs from field research in seven emerging economies that cover a range of geographies and income levels: Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan.
A $2.1 Trillion Opportunity
The agency reported that some 1.6 billion unbanked people could gain access to formal financial services; of this total, more than half would be women. $2.1 trillion of loans to individuals and small businesses could be made sustainably, as providers expand their deposit bases and have a newfound ability to assess credit risk for a wider pool of borrowers.
Rather than waiting for a billion people’s incomes to rise and traditional financial institutes to extend their reach, emerging economies have an opportunity to use mobile technologies to provide digital financial services for all, rapidly unlocking economic opportunity and accelerating social development.
Access to the payday loan, fast, paperless, with an affordable interest rate is what making MicroMoney the solution for financial Catch-22. MicroMoney is a global fintech company providing the access to payday loans for unbanked people in emerging markets and the access to the emerging markets’ audience for banks, trade, and financial organizations. Its motto is “MicroMoney for people, Big Data for business”.
MicroMoney for people, Big Data for business
Nine out of ten of Micro Money’s customers take their loan for the first time. All they need to get a loan is to install MicroMoney’s mobile application to their smartphone, to complete the loan application online and to agree to process personal data. Scoring system will analyze thousands of points of personal information no longer than in a few minutes, evaluating client`s creditworthiness and making approval or disapproval decision. If the application approved money will be delivered to client’s e-wallet.
Lending services allow people to support their families better, to create an opportunity for investments or an own business. MicroMoney not only gives the access to those opportunities for financially excluded people but making a social contribution, raising financial literacy, explaining how to spend money wisely.
Aspiring to growth and development,
MicroMoney is preparing to launch a token sale to carry out the business plan of shaping the legal market for creating and maintaining credit histories from scratch. Billions of unbanked people are ready to be the part of the global economy, want to improve their lives and the access to financial services gives them this opportunity.
MicroMoney Generated $1 Million from Token Swaps
Sept. 21, 2017, Singapore – Crypto funds and “whales” generated almost $1 million worth of token swaps with MicroMoney, a global fintech blockchain company and lending services provider, as its AMM token pre-distribution is ramping up, paving the way to the actual token swap valued at $30 million.
Kicked off Sept. 15, AMM token pre-distribution has a minimum swap threshold valued at $10,000 and a soft cap of swaps valued at $2 million. Thus far pre-distribution generated $0.93 million worth of AMM transactions. The actual token swap starts Oct. 18., with a soft target of $15 million worth of swaps, and a $30 million hard cap.
