Branch International, a fintech startup that assesses individuals’ creditworthiness using data from mobile devices has announced a partnership with American multinational financial services corporation Visa. The startup, also announced that it has raised a whooping 170 million dollars (17 Billion Kenyan Shillings) in its Series C funding led by Foundation Capital and Visa.
According to Hapa Kenya, existing investors Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, CreditEase, and Victory Park as well as new investors, Greenspring, Foxhaven, and B Capital, also joined this round of investments.
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Branch with its impressive number of more than 3 million customers and more than 15 million loans issued in Kenya, Nigeria, Tanzania, Mexico, and India, is working to expand access to credit in countries where the average middle class user might not have a credit history or even a bank account. Forbes says Branch’s co-founder and CEO Matt Flannery, took his inspiration for Branch in part from the success of Safaricom’s M-Pesa, a mobile money service that launched in Kenya more than 10 years ago. He added that easy access to credit helps create room for small businesses to grow.
Speaking on the activities of typical Branch users, Mr. Flannery says “They will take a $50 loan, go to the market, buy a bunch of stuff, make meals at their restaurant and then two weeks later do it again,”.
Flannery who is also a founder of the pioneer microfinance organization Kiva, says his time at the nonprofit helped him see the need for the product being offered by Branch. “I spent years traveling to Cambodia or Peru or Nigeria visiting borrowers taking loans from microfinance institutions,… I knew that this was a customer that banks weren’t really serving.”
Once a user downloads the app and verifies their identity, Branch’s machine learning algorithms using data like text messages, call logs, contacts, and GPS, determines if they are credit worthy. It also makes use of the user’s loan repayment history. After that, it can then grant loan approval in a matter of minutes.
Loan durations range from a few weeks to more than a year, and the typical loan amount hovers around $50.
With Visa on board, Branch will now have access to a global network of ATMs that way, users will be able to withdraw funds from an ATM using “virtual” Visa credentials within that code, no physical debit debit card or bank account required, as opposed to visiting local banks to retrieve the loans via a code sent to the devices.
As part of the new partnership deal, Branch will now also offer preferential loan terms to merchants who accept Visa on mobile phones in Kenya, Tanzania, and Nigeria.
Regarding the new investment with Branch, Visa’s executive vice president of strategy said “As we look to the future, we are looking for the opportunity to reach people who are outside of the formal economy or in places that are underserved… It’s about tapping into their distribution to help shape the future of microfinance.”
Branch launched its operations in India last month and has since then, added more than 30,000 users so far via word of mouth alone. The company (Branch), plans to use this new inflow of capital to continue to further enhance its presence in India as well as in Latin America (Branch is already operating in Mexico).
Visa’s investment in Branch will help expand its financial access across the continent of Africa, while at the same time, fueling new expansion in India and Latin America.
