Death Of Banks. How Tala And Branch Are Owning The Credit Industry

Courtesy of Youtube
As long as you have a good history, these mobile lending apps will give you upto 30,000 shillings within minutes. While banks still peruse through your records so that they can 'get back to you', Tala and Branch are redefining the meaning of emergency.

When stuck in a financial rut, and you like to avoid borrowing from friends, millions of Kenyans now resort to their mobile phones. Many local commercial banks have apps too, through which they give out loans. However, they still need you to have an account with them.

Tala and Branch leverage on technology to give you a credit score and give you the amount of money they think you can repay. What of defaulters? That's where the Credit Reference Bureau (CRB) comes in. They will hound you to the ends of the earth. To avoid missing out on loans in the future, you just have to pay back.

In the beginning, as they tried out this model, these two firms were willing to lose money through defaulters. However, it was not a total loss as they getting something back - your data. It with these data that they built an algorithm that could score credit rating better.

So what do they do in exchange for the convenience they offer you? Super high interest rates. It's a high risk business. But it seems the rewards are better for them.

They are designed to help people who actually know how to use loans properly. If you misuse your loan,you will still have to pay back - at a greater cost.


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