Revolutionary Credit Assessment for SMEs

Microfinance institutions (MFIs) and smaller financial institutions face several challenges in assessing the creditworthiness of Micro, Small, and Medium Enterprises (MSMEs). These include:

1. Limited financial credit history: Many customers lack a substantial financial credit history, making it difficult to assess their reliability.
2. Informal business structures: Many MSMEs operate under sole proprietorship structures that are not well-defined, adding to the complexity of the assessment.
3. Access to credit information: There are limitations in accessing information regarding credit, which hinder lenders’ ability to make informed lending decisions.
4. Lack of financial literacy skills: MSMEs often lack the necessary financial literacy skills, making it challenging for them to understand and navigate the lending process.
5. Absence of formal financial records: Many MSMEs do not maintain formal financial records, further complicating the assessment of their creditworthiness.

Understanding the SME financing landscape and the power of data:

In the rapidly changing world of financial services for MSMEs, the significance of data is paramount. Despite information being crucial for these businesses to access credit, it often circulates unevenly, posing hurdles for lenders and financial institutions.

Data has proven to be a powerful tool in mitigating information asymmetry, identifying fraudulent activities, and evaluating the creditworthiness of underrepresented borrowers. In this digital age, data-driven solutions are revolutionizing the financial sector, making it more fair, secure, and efficient than ever before.

Patascore is leveraging alternative data to transform the financial industry.

By using Patascore to assess the creditworthiness of their borrowers, MFIs and smaller financial institutions have been able to mitigate credit-associated risks by derisking small businesses in various value chains.

Benefits of Patascore to Financial Institutions

1. Comprehensive Credit Histories: One of the primary challenges faced by MFIs and smaller financial institutions is the asymmetry of information associated with limited financial credit history of their MSME customers. Patascore tackles this issue head-on by aggregating and analyzing a vast array of data points. This includes transaction histories, payment records, mobile money and bank statements — allowing lenders to build comprehensive credit profiles even for those with minimal formal credit history. Patascore has a wealth of experience in risk assessment across key sectors, for instance; agriculture, financial sector, FMCG, and Telecom among others.
2. Enhanced Risk Assessment: The informal business structures often found among MSMEs can make assessing their creditworthiness a complex task. However, Patascore employs a modular approach of flexible algorithms and machine learning models to decipher patterns within these structures. Analyzing cash flows, business operations, spending habits, credit performance, and other data, provides lenders with a more nuanced understanding of an MSME’s financial health and risk profile. Patascore is also capable of detecting fraud through pattern recognition, data integration, and outlier detection via its fraud detection algorithms.
3. Data Accessibility: Limited access to credit information can severely hamper a lender’s ability to make informed decisions. Patascore addresses this challenge by providing MFIs and smaller financial institutions with a standardized approach, leveraging less traditional data.
4. Financial Literacy Promotion: Patascore doesn’t stop at credit scoring; it also plays a pivotal role in enhancing financial literacy among MSMEs. By analyzing an MSME’s financial behavior, it identifies areas where financial education can make a difference. This not only helps MSMEs manage their finances more effectively but also reduces the risk of loan defaults.
5. Real-time Decision Making: The digital enablement at the core of Patascore ensures that data-driven decisions can be made swiftly. This is crucial in providing MSMEs with timely access to financial services. With Patascore, borrowers can receive loan approvals and disbursements in a matter of hours, facilitating their business operations and growth.
6. Character Assessment through Spending Patterns: Patascore also delves into character assessment by analyzing mobile money statements. It offers insights into how individuals manage their finances, including spending habits like betting or taking digital loans. This aspect provides a deeper understanding of an applicant’s financial behavior and risk propensity.

To book a demo with us please contact us at bd@pezesha.com or call 0703237660.

Learn more about Patascore