Microfinance
Event of the MFC of New York

Video of the MFCNY meeting on October October 3,

Burgess COMMENTARY

Peter Burgess

Profiling Credit Risk for the Informal Sector

This event took place on 3 Oct 2012 from 6:30 pm until 8:00 pm.

6th floor auditorium at Morgan Stanley - address below.

Access to finance in the informal sector is hampered by the lack of information on the borrowers. Clients have no financial history and no credit score.

In this evening’s discussion Megan Oxman, Program Officer of Innovative Finance at the Gates Foundation will give an overview of the barriers that make it hard for the 90% of the 2.5 billion people in the world who live on less than $2 per day to have access to formal financial tools.

She will introduce three initiatives that aim to improve that access.

Nicole Stubbs, Co-Founder & CEO of First Access, will describe how she is using prepaid mobile top-up data, and other phone metrics, in Tanzania to screen potential clients for microfinance institutions. The patterns in prepaid records give MFIs crucial information about the income stability of potential borrowers. Better information for lenders translates into lower costs by reducing credit risk, fraud risk, and evaluation time. By spotlighting the value of formal transactions in informal markets, First Access makes it easier for the poor to enter the formal sector.

Bonnie Oliva, Global Operations Director of InVenture. InVenture's vision is to provide a standardized global credit score for anyone with a mobile phone thereby increasing efficiency, transparency and driving down costs. InVenture’s first product is InSight, a text-messaging based system that enables individuals to perform basic accounting, demonstrate their creditworthiness and access financial services all through SMS. InVenture combines data collected through InSight with demographic data to create dynamic real-time credit scores which are then shared with lenders to help individuals qualify and access financial services.

Darrell Grissen, CTO of Entrepreneurial Finance Lab Research (EFL), a research project spinoff from Harvard, focuses on the problems Small and Medium Enterprises (SMEs) face in accessing finance. Their solution is psychometric testing. These tests have been used extensively in the academic studies of entrepreneurs, as well as in for pre-employment screening with great success. A battery of these evaluations of personality, intelligence, and character provide direct measures of an entrepreneur’s ability and integrity. They can be automated, do not require a credit history, and are resistant to manipulation. When combined with the right financial contracts, they could represent a breakthrough in profitable lending to the missing middle.

Moderator: Bryan Wagner, Executive Director, Morgan Stanley Global Sustainable Finance

Participants

Megan Oxman Megan Oxman is a Program Officer of Innovative Finance within the Financial Services for the Poor (FSP) team at the Bill & Melinda Gates Foundation. The FSP team focuses on providing digital financial services to those who live on under $2 per day. In this role, she manages private sector relationships and helps structure investments in for-profit institutions. More

Nicole Stubbs Nicole is the Founder and CEO of First Access LLC. Focused on supporting entrepreneurship in emerging markets, Nicole has experience in Asia, Africa, Latin America and Europe. More

Bonnie Oliva Bonnie, Global Operations Director at InVenture, has worked with micro-entrepreneurs in different capacities, from assisting with writing business plans to financial planning, budgeting and hiring employees. More

Darrell Grissen Darrell Grissen is currently the CTO of Entrepreneurial Finance Lab (EFL). He has extensive experience with tech startups with a background in operations, product management, development, and sales with global work experience in the US, Europe, Australia, Africa, and Latin America. More

Bryan Wagner Bryan leads social finance coverage as a member of Morgan Stanley Global Sustainable Finance, coordinating the Firm’s work with companies and investors active in microfinance and other business models targeting the global economic base of the pyramid. He has worked on a variety of inclusive finance assignments spanning Latin America, West Africa, India and the U.S