It may not be the first place you’d think of going for a loan, but it seems to be working for Fintech firm, MyBucks. Having been trading since 2011 the company’s already made quite a name for itself in the financial industry. And now for just over a year, the lender’s been using artificial intelligence (AI) to offer quick loans through the likes of social media sites such as Facebook Messenger and WhatsApp.
The quick loan app is called Haraka and is available for customers located in Kenya, Uganda, Zimbabwe, and Swaziland. Later this year the company is looking to expand that offering to cover India and the Philippines too. The way it works is like this:
First the customer downloads the app. Once installed the app sets to work scraping the phone’s data. This includes gathering information from text messages, call logs, as well as the person’s physical location.
Customers can also log into MyBucks using their social media logins. This then allows the company access to their profile where they can examine the potential borrowers behavioral traits. “Very active social media accounts are likely to be real people, and we make sure the information on the cellphone and the social media account tie together,” said Tim Nuy, deputy CEO at MyBucks.
Moving away from the traditional methods of credit scoring, Nuy says the company get a “full enough picture to grant a loan with a default rate that’s acceptable to us.” For new customers, small loans are offered to begin with. Once they’ve shown they can be trusted by repaying the loan, their loan limit will increase.
Around 10,000 to 20,000 Hakara loans are distributed every month, with more than 200,000 made in the past year. But this isn’t MyBucks’ only form of income from loans. They also offer loans via the more traditional credit checking methods in countries such as South Africa. While it does use AI to vet potential customers it also looks into their credit history as well.
So are countries such as the US and the UK likely to see this form of AI lending too in the near future? Maybe not in quite the same way, but potentially yes. Banks are already beginning to use AI in various parts of their business models, so why not use it to help vet potential borrowers? I guess only time will tell.
Source American Banker