Fintech investments grew 75% last year to more than $22 billion, and participants are wondering how the industry can expand.
One area of interest among social entrepreneur types is expanding access to credit to “unbanked” SMBs in the developing world.
This is a noble cause that, if executed properly, could stimulate economic growth and rising living standards. But its execution is complicated.
Alternative lending has drawn great interest in the West, from marketplace consumer lending startups like Prosper, merchant installment plans like Affirm, to SMB lending platforms like Kabbage and OnDeck.
However, such platforms have largely failed to get traction in the developing world, except China.
Alternative lending platforms in the developing world lack sufficient access to capital or quality data to provide loans at reasonable rates.
There are exceptions, like Nubank in Brazil, Kreditech in Eastern Europe, and PawnHero in the Philippines.
However, each of these platforms must figure out how to get adequate data to make lending decisions without the credit reports relied on in the West.