When a company uses an individual’s airtime patterns to approve mobile finance solutions, it is the individual applying for the airtime recharge loan and not the corporation. A low-value airtime recharge loan can be accessed instantly, allowing the client to smooth monthly cash flows.
The SME can create a loan applicant profile based on their airtime transaction history and incorporate this data into their credit adjudication algorithms. The SME can use an individual’s airtime transactions to determine if they have a pattern of paying off their bills on time.
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It can also determine if an individual has a high number of dropped calls, which may indicate that they are not entirely in control of their monthly expenses and financial situation before having mobile money lending.
The SME can then use this information to disburse a loan up to the value of an individual’s monthly airtime spending or a capped amount. The SME can also offer different repayment plans:
The SME may be able to extend credit to a large population of individuals, who are typically excluded from finance and only have limited access to credit, as there is no capital expenditure involved. The SME can create a loan applicant profile based on their airtime transaction history and incorporate this data into their credit adjudication algorithms.
The SME can provide customers with greater flexibility in the way they repay their loans. The individual can choose to pay off their loan at any time, as well as apply to defer payment of the loan. With this, the SME may be able to increase repeat loan users, by providing favorable terms on loans, relative to most other financial institutions.
The mobile phone accounts for just over half of all minutes of a call made globally. When companies use an individual’s airtime transactions to approve mobile finance solutions, it is the individual applying for the airtime recharge loan and not the corporation.
A low-value mobile money lending can be accessed instantly, allowing the client to smooth monthly cash flows.
Conclusion
As a result of this and other mobile finance solutions similar services that are currently in operation, SMEs may be able to reach out to more new markets than ever before. This allows SMEs to access an even larger portion of the consumer market, as well as increase their market share within their current consumer base.
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