Oakam CEO Frederic Nze Talks Financial Inclusion
What problem is Oakam Solving?We’re a microlender that provides credit to those who have a limited credit footprint. We do that by leveraging alternative data and using behavioural science to nudge our customers into better financial habits.
So What Makes You unique?The uniqueness is tech, the usage of data and smartphones as a way to distribute. We have limited ideas of how people who are low-income or are migrants are gaining access to credit. Not just in the UK but in places like Uganda, Nigeria, or Mexico etc. In the UK, the dominant player in our market is the doorstep lender. These are people who just knock on the door, give cash and collect cash every week. That has been the number one model for 135 years. It’s a very human-intensive model. Part of our uniqueness comes from us attacking a human-intensive market with technology. If we compare ourselves to mainstream lenders, then we’re breaking away from the dominant model where you have to be in the system to be in the system. You start by using a credit card when you’re a student and that gives you your first footprint, you’re creating scorecard. That goes into the Credit Bureau and that tracks as you progress in life. If your score drops off then you become sub-prime.
Underbanked Not UnbankedThe problem is it doesn’t work well for people who enter the country at a later stage. So if you come into the country when you’re 35, then you’ve got a thin file. If you’re low-income then you have to face products that are not designed for you. So if you’re earning less than £1000 per month in the UK and you only want to borrow £200 - £300 there are few suppliers that provide loans of that nature. As a result we see many customers who are not unbanked but underbanked. We’ve used psychometrics to get people in the system without having a footprint, and the last thing that makes us unique is using a mix of retail outlets and smartphones to access customers. We used retail outlets to make first contact with customers and then progressed to app-based lending.
In loan interviews first impressions count but underwriters carry a lot of unconscious bias. @Frednze says the @OakamLtd solution was to show 15 #psychometric flashcards. It beat the bias 📻 https://t.co/RgJMLMFad5 📻 #automated #underwriting #digital #financialinclusion pic.twitter.com/skVnty9yT5— FinTechInsider (@FinTechInsiders) May 18, 2018