Digital credit has emerged at the digital finance frontier, drawing attention from all players across the DFS ecosystem. A new CGAP brief explores the inner workings and key characteristics of digital credit offerings.
In the growing field of digital credit, CGAP research has found exciting innovations along with fundamental miscalculations. CGAP's self-directed course, "An Introduction to Digital Credit," presents key lessons for practitioners, regulators and others with an interest in digital credit.
Digital credit is disbursed and recovered rapidly, often in 30 days or less, and generally with loan amounts smaller than conventional credit or micro-lending. CGAP built a digital credit financial model to investigate the basic financial dynamics of loan portfolios made up of short-term, small loans.
Digital credit is on the rise in Kenya. While digital lenders are expanding access to credit for many Kenyans, they are operating outside regulation by any financial sector authority–and some key consumer protection concerns have started to emerge.
In emerging markets, policy-makers have often struggled to keep pace with the rapid growth of digital credit. With the establishment of consumer protection authorities unlikely in the short term, here are three steps policy-makers can take now to protect consumers.
CGAP, in collaboration with the College of Agricultural Banking, just completed a national survey, which captured the big picture on agents across the country. In India, the term customer service point (CSP) is used to refer to individuals who act as agents on behalf of banks.
Eko was the first company dedicated to a mobile phone-based basic savings account and payment service for the unbanked in India. Launched in 2007, Eko has carefully developed a mobile-based service usable on the most basic of handsets and continually revised and re-fashioned its approach.
We’ve done a lot of thinking at CGAP about the different business models and partnerships that exist in branchless banking. What I find interesting is that rarely do you find two models that look exactly alike. Once you begin to really dig beneath the surface, you realize that even among those businesses that we might simplistically call “telco-led” or “bank-led”, there are significant differences.
At the end of the day, we suspect interoperable systems will accelerate financial inclusion by allowing customers to use the infrastructure of multiple service providers to access their accounts. The question is how best do we get there?