How can we create credit histories for unbanked people? In this episode, we sit down with Rajat Dayal, CEO and Founder of YabX, to explore how his company is revolutionizing credit access in emerging markets. About 1.5 billion individuals and businesses have no access to credit or any other financial product. Rajat shares insights on leveraging alternative data, like mobile wallet activity, to create credit histories for those overlooked by traditional banking systems. We delve into the challenges of non-traditional credit scoring, the impact on local economies, and how purpose-driven loans can foster financial inclusion.

Discussion Highlights:

• Financial Inclusion and the Credit Gap: Rajat discusses the massive challenge of providing financial services to the 1.5 billion individuals and businesses without access to credit. Traditional banks often overlook this segment due to the lack of credit histories, creating a chicken-and-egg problem where people can't get credit because they have no credit history, and vice versa.
• Leveraging Mobile Wallets and Alternative Data: In regions like Africa, mobile wallets such as M-Pesa have transformed how people transact. Rajat explains how YabX utilizes mobile wallet data and other alternative data sources—like utility payments and telecom data—to assess creditworthiness. This approach helps create credit scores for individuals who previously had no formal financial footprints.
• Challenges with Non-Traditional Credit Scoring: Traditional banks often hesitate to trust alternative credit scoring methods. Rajat shares how YabX builds trust with banking partners by demonstrating the efficacy of their models through back-testing and pilot programs. He emphasizes the importance of proving that these non-traditional methods can predict repayment behavior accurately.
• Purpose-Driven Loans: YabX focuses on offering loans for specific purposes, such as purchasing handsets or paying school fees. Rajat explains how purpose-driven loans increase the likelihood of repayment because the funds are used for essential needs, aligning the interests of both the lender and the borrower.
• Impact on Local Economies: By providing access to credit, YabX empowers small businesses and individuals in rural and underserved areas. This not only helps these businesses grow but also contributes to job creation and economic development in local communities. Rajat highlights how digital lending platforms can reach areas traditional banks can't, fostering broader economic digitization.

About Fintech Files:

Join us on Fintech Files from BCG Platinion as we explore the cutting-edge trends disrupting Fintech today. From NeoBanks to Digital Banking, we delve into the dynamic landscape of financial technology through insightful conversations with global disruptors. We’ll uncover the most groundbreaking trends shaping the future of Fintech and examine their impact on the financial world. Our episodes break down complex topics, with guests explaining everything in a way even their grandmas could understand. We focus on real-world examples, making financial technology relatable and accessible to both Fintech enthusiasts and professionals alike.

Meet the Hosts:

Hosted by Nora Hocke, a manager at BCG Platinion in Munich, and Annika Melchert, a principal currently based in the Middle East, our hosts bring expertise in tech transformations, platform architecture, and digital innovation. With a wealth of experience working with leading Fintechs, they offer unique insights into the evolving financial landscape. Joining them is Bianca Lopes, an entrepreneur and economist from Brazil, now based in Denmark, with a background in digital identity and biometrics. Having supported over 40 financial institutions and 8 governments, Bianca’s work reshapes technology, reimagines identity, and drives innovation.

We Want to Hear from You!

Reach out to us at fintech-podcast@bcgplatinion.com with your questions, guest suggestions, or topics you'd like us to explore. Or just drop in to say hi! Visit our website at https://bcgplatinion.com/insights/podcast-fi/ and follow us on social media for updates and additional content.

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