This company uses smartphone data to assess creditworthiness

Branch is a financial services company that’s offering people across emerging countries ways to access loans.

What do they do?

The company uses machine learning to analyze data within your smartphone and determine whether you qualify for a loan. With your permission, Branch looks at=

  • SMS logs
  • Repayment history
  • GPS data
  • Call logs
  • Contact list

Upon approval, they’ll provide you with a loan within their mobile app. There is no paperwork and everything is 100% handled with your smartphone. It’s part of the company’s effort to “bypass hurdles imposed by traditional institutions.”

This gives people across emerging countries the ability to build their credit history. The loans range from $2.50 to $1,000 and have a typical loan term between 4 and 68 weeks. The monthly interest on those loans ranges from 1%-14%.

Why get a $2 loan?

In countries like Nigeria and Kenya, $2 is equivalent to around $40. Obviously, this could feed an entire family for a day or two, and sometimes that’s all you need until your next paycheck rolls in.

The idea of micro-loans has been around for at least a few years. However, until recent developments in technology, it was hard to get people in emerging countries access to those micro-loans. I’m interested to see where Branch is able to go and whether it’s something that will be widely adopted even in America.

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