US firm targets small borrowers with mobile banking app

It will now take you less than a minute to access credit, following the launch of a new mobile banking app. US based tech firm Inventure has introduced the Tala loan app, which borrowers can log on to access loans in just 20 seconds.

In an interview with Citizen Digital, Inventure East Africa Vice President Amanda Donahue said the demand for micro loans in the country has been on the rise, with borrowers able to access as little as Sh2,000 repayable in four weeks.

“The application process takes a couple of minutes. Once you hit submit our system is able to determine your eligibility into the program within 20 seconds,” Ms Donahue said.

The popularity of mobile banking apps has been that borrowers don’t need a bank or savings account to borrow or even qualify for a loan.

In the case of Tala, the system mines for data from other parties to determine ones eligibility and the loan terms they qualify for. Once a borrower has a consistent record with the firm, they will be able to increase their loan limits and even get favorable rates.

“Once you take your first loan and you repay the loan, your credit limit increases, and this happens over and over with each loan you take,” she said.

Borrowers with good scores can access up to Sh50,000 payable in three to four months.

Tala works by gathering more than 10,000 data points from customers’ mobile phones to make credit decisions and send loans directly to phones.

The service has disbursed close to Sh1 billion.

Banks have in the last one year also turned to mobile banking apps in an effort to attract a new crop of borrowers by eliminating stringent requirements. KCB partnered with Safaricom to develop the KCB M-Pesa account, which has already disbursed Sh7.8 billion in its first year.

Equity so far has 1.7 million customers on its Equitel service which issued loans worth Sh8.5 billion by December 2015.

By Karen Mwaniki