The Mobile Credit Score, recently launched by gnuGrid CRB and Airtel Mobile Commerce Uganda Limited (AMCUL), will rapidly close the information asymmetry challenge in bottom-of-the-market lending, enhancing two-way lender-borrower trust and in due course shall reduce the cost of borrowing, Giles Aijukwe, the Chief Executive Officer of Letshego Uganda, one of the leading non-deposit-taking lenders has said.
Mr. Aijukwe, who was a panellist at the launch of the Mobile Credit Score, hailed the Mobile Credit Score, the first of its kind as a transformational solution and said that it was mutually beneficial to lenders and borrowers alike.
The first thing that credit scoring has done for lenders, especially those of us in tier IV who lend to the bottom of the pyramid, is solve the challenge of information asymmetry. That’s the biggest risk we deal with. Lenders are not sure that the information they are getting from borrowers is sufficient to make a decision. Borrowers are also not sure that the feedback, they get from the lender in the form of the amounts we are willing to give, is sufficient to take their business to the next level,” Aijukwe said.
“With this Mobile Credit Scoring, there are many data sets that this application is able to bring together and do a triangulation and assign a weight/rating based on your transaction behaviour with your telecom provider. Because the lender already has about 40% of your information from other KYC channels and other traditional credit reference bureau information, that gives us a very reasonable amount of information on how to deal with the customer. That covers the gap of information asymmetry. I may not know 100%, but we now have a reasonable amount of information to initiate the transaction or not. For us who have already adopted this Mobile Credit Score, it is very transformational. Because we are able to do desktop appraisals quickly; we are able to scale and serve very many people in a very short time,” Aijukwe added.
The Letshego CEO also said that one of the biggest benefits for borrowers is preferential risk-based pricing for borrowers with a good track record.
“Because we already have a good amount of information from the existing traditional credit reference bureaus, and now this Mobile Credit Score, and soon we will be picking data from utility companies and other sources, we will be able to easily separate risky from non-risky clients. Clients with good behaviour will get discounts and the best prices while those deemed a little riskier will pay a premium above market rates,” Aijukwe said.
“The gnuGrid Mobile Credit Score opens a whole new frontier for KYC, especially for those of us who deal with a lot of individuals and not established and formal businesses. Most of these individuals don’t bank, don’t save or borrow from formal institutions. Leveraging the transformational power of the National Identification Number (NIN) and now this mobile-phone-transaction-behaviour-based credit scoring system, we are able to build a more comprehensive digital KYC almost instantly,” he further said.
He also explained that now that borrowers can access their credit scores on the phone, they will be able to “approach any lender and any lender will also be very confident to deal with you ⏤ because you look, you appear and you act credible. In the financial services space, when you pass the credibility test, it means you can be trusted”.
“When lending to credible people, because you have information about them, you are confident about the decision you are making and this will scale up lending and will revolutionise the way we have been doing things and also bring to life responsible lending and borrowing. No doubt, this Mobile Credit Score will build responsible lending and borrowing,” Mr. Aijukwe concluded.
To know your Mobile Credit Score, (Airtel customers only for now), please dial: *185*8*8*1# and follow the prompts.
To know more about how your lending organisation can get plugged into the gnuGrid CRB Mobile Credit Score, you can reach them on this toll-free number: +256 (0) 800 330003.
They can also be reached on their WhatsApp Smart AI Chat: +256 (0) 785 210522
Alternatively, they can visit gnuGrid CRB’s website: https://gnugridcrb.com/