The Social FinTech raised €10m in a series A this week. FairMoney was founded in 2017 by Laurin Hainy. This Paris-based startup has their operations in Nigeria, but their aspirations lead further. In fact, their mission is to be the leading digital bank in emerging markets. Here is an excerpt from their website:
“2 billion people have limited access to financial services in emerging markets. We created FairMoney, an application using smartphone data to build an instant credit score and give loans to individuals & small businesses in Emerging Markets.”
FairMoney is currently a micro-lender. It offers those in Nigeria small loans of up to $440. These loans are accessible through an app. To obtain a loan, the company has an algorithm which analyses the data from a user’s smartphone to underwrite the loans. The use of alternative data has become more popular for companies that issue credit. This is both for more in-depth insights when determining credit scores, in addition to financial inclusion.
How does FairMoney determine credit-worthiness?
As mentioned above, FairMoney uses alternative data to create a credit score. But what really is this? Alternative data is generaly considered as non-traditional data gained from sensors, the internet, social media or transactional data. Each category has multiple examples. FairMoney uses data gained from financial information that you share (transactional), your geolocation (sensory), data from your other installed apps (social media), a questionnaire you fill out and other factors. After crunching this data, FairMoney creates a credit score. Customers usually have an answer in only a few minutes.
FairMoney currently has 200,000+ users. The majority of users seek finance for small business needs. One great feature which they have included is the purchasing of airtime in the app. This allows for a hassle-free way for users to do a variety of things with their phone. Examples are: topping up phone subscriptions, purchasing data, paying for internet and electricity bills. FairMoney said they will use the new funds to scale the company’s engineering team. Therefore, they can develop a fully-fledged digital bank offering in Nigeria and beyond…