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How CARMA is enabling a data-sharing ecosystem to enhance financial inclusion

Many lenders do not have sufficient or comprehensive credit data to offer customized financing for the unbanked/underserved in Africa. Data sharing among organizations represents a promising opportunity for lenders and fintech to access different customer data sources and information to develop innovative financial services that reach consumers everywhere.

Financial inclusion continues to be uneven and still prevalent, with an estimated 370 million unbanked and underserved citizens across the continent (World Bank). Most financially excluded people resort to informal financial services, which are aggravated by insufficient economic infrastructure. Lack of adequate collateral prevents Africans from accessing credit because a large number of the population lacks credit history and other traditional data sources are limited. Lenders require reliable data to measure consumer risk players and reach the unbanked people adequately.

In recent years, the rapid growth of mobile banking in Africa has improved financial inclusion in the continent, benefiting a significant proportion of the population. The continent is seeing a ramping up of digital and economic services footprint which can be used as alternative transaction data for lenders to make more innovative credit decisions. With the recent adoption of Open Banking in countries like Nigeria - banks, fintech, and lending companies need to come together to provide financial inclusion opportunities to the underserved citizens by leveraging data sharing opportunities.

CARMA's API-based data marketplace enables the exchange of customer data,  peer-to-peer,  without exposing companies' entire databases. Our peer-to-peer marketplace allows companies with KYC and consumer transactional information to share data and get paid.

Here are some examples of how data sharing can enhance financial inclusion in Africa:

  • ᠆ Alternative data can help with credit availability: Data sharing allows lenders access to alternative credit data scoring. This solution would make credit availability for the unbanked faster, cheaper, and credit-worthy. The underbanked rely on cash and don't have any traceable financial history; therefore, you need to rely on different behavioral attributes to create credit scoring systems. The data could come from smartphone data such as contacts lists, monthly utility bills, mobile money transactions, and agent banking. Using alternative options of consumer data to reach the underbanked will facilitate access to financial services for these clients.

  • ᠆ Providing access to smarter credit decisions: Properly designed data sharing capabilities can create alternative financial data to support lenders and consumers. This allows lenders to make more intelligent and informed credit decisions while reaching a large population of the underserved and expanding access to credit that helps consumers access what they can afford.

  • ᠆ Technological innovation improving credit management to reach the underbanked/underserved: Traditional credit scoring has become inadequate in managing thick files into thin files. CARMA is working on solving the lack of credit history available for assessing the creditworthiness of individuals. Our API-based marketplace solution allows organizations with data sharing capabilities to contribute and consume data to access a larger pool of underserved customers and drive financial inclusion.

As such solutions demonstrate data sharing opportunities, it will require community/industry-wide collaborations among crucial stakeholders to encourage widespread sharing across organizational and geographical boundaries.

For more information on our data sharing capabilities, you can get in touch with Femi Oluyide our co-founder and CBDO - femi@carmachain.com