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What can Africa teach the west?

When bankers speak of the underbanked they usually mean the least financially included inhabitants of Africa and SE Asia. Little / no bank account access, no credit, no collateral. Have no ability to significantly improve their lives due to little access to capital. Little incentive for banks and traditional finance to target them. You may think it's an Africa only challenge but even the USA has over 15% of its population without a bank account.

However, this has made developing countries from these regions more innovative and the best of them think not how to catch up with modern Europe or America but how to compete in the future. Trying to build the same banking industry, public transport, MSME is a strategy where you’ll always trail after the leaders. Like starting the race when your competition is past the halfway mark.

Developed countries have a handicap. You don't have to change much if all works well. That is why developed countries can afford to be conservative and not rock the boat too much. Sounds like an opportunity for developing nations. For example, digital only banks are still quite early in the developed world. There is no point to be quick if everybody is happy with their bank branch down the road. However, the entire substitution of traditional physical banks with digital banks reduces the cost of operations significantly hence better rates & ease of access to its customers.

Africa is a willing guinea pig for innovative tech solutions. There is significant momentum to equalize and improve the lives of Africans. We have a great fintech revolution occurring on the continent from payment platforms like Flutterwave, Paystack and Chippercash to digital banks like Kuda, Carbon and Fairmoney. This revolution has introduced a large number of unbanked citizens into the high tech fintech ecosystem and the financial industry, accessing services and products that were before only a pipe dream. 

The next stage of this revolution is using this technology and digital expertise to improve services offered to their users. One of the ways this is possible is that these platforms adopt alternative credit data to build their credit scores. This allows for digital lenders to have similar, even higher levels of financial inclusion as featured in the great NY Times piece written by Tara Siegel Bernard

CARMACHAIN aims to truly democratise access to credit in Nigeria by connecting lenders with the data they need to make more informed lending decisions. We achieve this by connecting lenders with alternative data sources in real-time and on a peer-to-peer basis.  In other words, CARMACHAIN is a decentralised data marketplace that enables sharing of alternative data among fintechs and other service providers on a peer-to-peer basis while also enabling these fintechs/service providers to monetize their data.

In summary, access to alternative credit data is of significant benefit to both consumers and lenders alike. A consumer’s digital footprint offers a more comprehensive view of their socio-economic activities thereby enabling lenders to significantly increase acceptance/approval rates for thin-file and first-time borrowers.

For more information on how you to leverage alternative credit data for your business, do contact me through femi@carmachain.com