An unsecured android product using smartphone data to make decisions on creditworthiness.
The founder and global chief executive of Tala Shivani Siroya spoke to Njiraini Muchira on using the mobile platform to drive financial inclusion.
How has Tala helped drive access to financial services?
As a customer-focused technology company, we have helped customers who were shunned by banks to have access to credit.
We have developed an android platform that allows customers to download an app and apply for a loan and get it on their M-Pesa wallets in less than five minutes.
How does the technology work?
Customers download the app for free and we only ask them to give us access to key data on their phone that tell us things like financial transactions history, their behaviour, their capacity to borrow and potential to repay the loan. We use the information to offer loans ranging from $10 to $200.
Why did Tala choose Kenya as the launch market for the product?
Kenya was our first market because of the innovations that we saw in the country. Innovations like the national identity database and M-Pesa made us decide to test the product in Kenya and it has been a success. Now we are going global.
Kenya has performed well in deepening financial inclusion. What makes Tala different?
We were the first to come on the market with an unsecured android product using smartphone data to make decisions on creditworthiness.
There were products but they were collaterised products, so we provided a different product that is unsecured. Now there are so many other products that even traditional banks are now coming onto the market.
How long has Tala been in existence and what’s the level of market penetration?
We launched in 2014 and we have about 930,000 borrowers in Kenya alone. Globally, we have about a million borrowers on the platform. In terms of growth, 90 per cent of our portfolio are repeat customers and we also have over 90 per cent repayment rate.
How do you analyse customers’ ability to borrow and repay?
We are a data science company and we are building our models to understand and customise loans.
We bring tens of thousands of different data points that vary between transaction data, behavioural data and character data that allow us to understand the capacity of customers. We take the data and use it in our credit strategy and credit policy to give them customised loans.
Why focus on the micro market?
We are a mass market solution provider and our mission as a company is about the under-served globally.
The customer base we are targeting are those customers who have been overlooked by banks. This market resonates well with Tala, because we offer unsecured loans with no collateral required. Our loan repayment period is 21 to 30 days and we charge a 15 per cent interest.
Does Tala have the financial muscle to sustain a demand for loans?
We ensure that we have the resources to keep growing in terms of innovating on new products, refining our credit models and having the capital base to support the growth. We feel comfortable with our base now.
At the beginning of this year we raised $30 million to fuel our growth. We have enough debt capital as well as equity capital to continue operating and growing. Tala has disbursed more than 4.6 million loans worth more than $250 million in credit throughout East Africa.
How is the regulatory environment?
In Kenya , we are registered as a limited company and currently we are involved in conversation on exactly where we fall between the Communications Authority, Central Bank of Kenya and the Financial Services Authority.
But, whichever regulatory body we fall under, we have always ensured that we follow the best practice. We ensure we follow all the customer protection rules.
We believe in customer privacy and from a security standpoint we take all the precautions that are necessary. In Tanzania we are registered as a microfinance institution which is regulated by the Bank of Tanzania.
What are the growth projections for East Africa?
We seek Kenya as a market opportunity of at least 11 million people and that is our target over the next few years. In Kenya we look to double our customer base in the next year.
Globally, there are three billion people who don’t have access to credit and are underserved. That is the market we are going after. Currently we are in four countries and hope to expand to more countries this year. We are also looking to enter Uganda and Rwanda.
Previous positions: Shivani Siroya held several positions in global health, microfinance and investment banking. She also worked with the United Nations Population Fund, Health Net, Citigroup and UBS.
Education: Ms Siroya holds BA from Wesleyan University and MPH from Columbia University.
Experience: Ms Siroya is an Aspen Institute Finance Leader Fellow, a WEF Young Global Leader, Senior TED Fellow and Ashoka Fellow. She also sits on the board of Stellar.org.