Kenya has been attracting Fintech solutions owing to the rise of Safaricom’s M-Pesa mobile money platform. These solutions range from smartphone applications to simple codes running on USSD protocols all seeking a slice of the market. One of the rapidly growing segments has been mobile loans, which users can access through these platforms. Key players in these segment include M-Shwari, KCB M-Pesa account, Equitel, Branch and Mkopo Rahisi.
Mkopo Rahisi is a Kenyan startup launched in 2014, seeking to offer loans to users via a smartphone app. Mkopo Rahisi uses over 10,000 data points such as location, social media data and financial history to calculate the credit score of an individual before disbursing loans to them in 20 seconds. In its 11 months of existence, the company has issued 265,000 loans totalling to Kshs. 1 Billion with 75,000 customers on the platform. According to data from research company Djuaji, Mkopo Rahisi ranks second in terms of market share for mobile loans via smartphones with 24.29% of the market, while Branch holds 27% market share.
The firm has now relaunched and re-branded as Tala, with plans to expand operations in the region. The relaunch also includes new updates to their App with addition of features such as credit score, personalized credit and an improved user interface. According to Amanda Donahue, Mkopo Rahisi’s relaunch to Tala aligns with their goals of good customer service, educating the end user and offering an excellent product. Amanda says the firm has a non-performing loans rate of 10%, a significantly high number. “The 10% number will significantly decline as we refine our credit score model locally. Basically, when a new users signs up, we give them an unsecured loan which allows us to query their data to determine their credit worthiness in the long-run, a factor increasing the non-performing loans”, she added. Amanda was quick to add that 95% of their customers return for a second loan.
According to Amanda, Tala has devised a better methodology of dealing with defaults. “Instead of referring you to the credit bureau, we instead let you build a credit identity every time you borrow. This positive reporting in turn allows us to understand borrower patterns, which informs your credit score”. Tala has so far raised $10.2 Million from investors and issues loans of up to Kshs. 50,000.