US-based mobile phone lender Branch signs up 100,000 borrowers

A customer checks out a mobile phone-based loan platform. PHOTO | FILE
A customer checks out a mobile phone-based loan platform. PHOTO | FILE 

US- based mobile phone lender Branch has signed up 100,000 customers in Kenya.

The financial technology (fintech) company has been stepping up operations in the country following a $9.2 million (Sh929 billion) investment from a Carlifonia-based fund.

Branch offers loan amounts ranging from Sh1,000 to Sh50,000. Customers increase their credit limits based on their repayment records.

On average, each Branch customer has taken out five loans. Repayment terms range from four weeks to six months, with fees of six per cent to 16 per cent per loan, which decrease as customers move up the loan ladder. The loans are disbursed through M-Pesa.

The mobile lender projects that the number of loans issued could hit 500,000 within the next three weeks in tandem with increase in customer numbers.

“The level of demand we have seen for our product is overwhelming”, said Branch CEO Matt Flannery.

Applicants agree to share their phone data such as handset details and M-Pesa transaction logs with the company as they request a loan .

An algorithm then analyses over 2,000 markers in the data that correlate with good repayment behaviour and builds a personal credit profile that is used to assess applications and create loan offers.

“This means that Branch can do away with traditionally used lending requirements such as paperwork and collateral so as to credit customers’ mobile wallets in mere minutes,” said the company in a statement.

Mobile phone- based lending has been steadily growing in the country with telcos, banks and other players jostling for a share of borrowers.

Phone-based bank account KCB M-Pesa has disbursed a total of Sh10.3 billion in loans to its customers since March last year, indicating a growing appetite for short-term loans.

The joint venture between the bank and Safaricom has signed up 6.4 million account holders with over Sh286 million saved on the platform.

Mobile phone subscribers borrowed up to Sh30 billion worth of airtime or nearly a third of the total airtime Safaricom sold last year.

At Sh30 billion, Okoa Jahazi’s loan book was larger than that of some bottom-tier commercial banks — making it a significant player in the credit market.

M-Shwari currently has 13 million customers and disburses loans for a period of 30 days (with the rollover option) and processes an average of 70,000 loans daily.

Equity Bank – through its Equitel mobile virtual network operator licence – so far has 1.7 million customers and issued loans worth Sh8.5 billion in the year to December 2015.

Mobile money lending firm Mkopo Rahisi has rebranded as a financial services provider and changed its name to Tala.

Co-operative Bank in August 2014 unveiled M-Co-op Cash, an Android app which offers loans of between Sh100 and Sh200,000 repayable within a month at a one-off seven per cent processing fee.