PURCHASE, N.Y.--(BUSINESS WIRE)--MasterCard (NYSE:MA)
and the Entrepreneurial
Finance Lab (EFL) today announced a global partnership to promote
small business (SMB) growth in developing countries. The partnership,
signed during a ceremony at the SIBOS Conference in Dubai, provides
international issuers in developing markets with new tools to
help improve credit underwriting for unbanked small businesses. The
cost-effective approach to screening and risk evaluation increases SMBs’
access to capital, unlocking entrepreneurial potential and driving
economic growth around the globe.
“Around the world, SMBs lack access to low cost financing, and banks are
handcuffed from lending by lack of data on them. In developing
countries, only 20 percent of SMBs have a positive bank performance
while only another 20 percent have credit bureau references”
Throughout emerging markets, SMBs are often shut out of the financial
system due to a lack of traditional prerequisites for finance, including
reliable credit bureau and bank performance information being available
to financial institutions. EFL’s psychometric risk-scoring technology
narrows the financing gap for high potential, growth-generating SMBs, by
providing a unique vetting process that evaluates business acumen,
honesty and integrity. Through the partnership with EFL, MasterCard is
extending its strategic mission of
financial inclusion across all customer segments and regions.
“Around the world, SMBs lack access to low cost financing, and banks are
handcuffed from lending by lack of data on them. In developing
countries, only 20 percent of SMBs have a positive bank performance
while only another 20 percent have credit bureau references,” said Ed
Glassman, Group Executive, Global
Commercial Products & Solutions at MasterCard. “With EFL’s innovative
credit scoring tool, even the smallest business will be able to join a
payments network, avoiding the inefficiencies and risks of checks and
becoming able to compete for the same customers as the largest global
retailers.”
Among the first banks to benefit from the partnership is Banco
BHD of the Dominican Republic which will utilize the EFL model to
credit score MasterCard small and medium size businesses credit cards in
addition to its traditional SMB term loan business. MasterCard and EFL
are working globally across Latin America, South East Asia, Mid-East and
Africa to promote the use of psychometric scoring as an alternative to
traditional credit scoring where SMB credit underwriting challenges
exist.
“Since
our inception out of the Harvard University Research Lab in 2010,
EFL has enabled close to $200 million in new loans to unbanked small
businesses in emerging markets,” confirmed D.J. DiDonna, co-founder and
Chief Operating Officer of EFL. “Across 26 languages in over 20
countries, EFL’s psychometric risk scoring provides new, crucial
information which enables banks to lower restrictive lending hurdles for
SMBs. EFL partner banks have observed increased lending and
profitability along with the new customer-base of under banked, many of
whom enjoy their first risk-product relationship with a formal financial
institution.”
About MasterCard
MasterCard
(NYSE: MA), www.mastercard.com,is a technology company in the global payments industry. We
operate the world’s fastest payments processing network, connecting
consumers, financial institutions, merchants, governments and businesses
in more than 210 countries and territories. MasterCard’s products and
solutions make everyday commerce activities – such as shopping,
traveling, running a business and managing finances – easier, more
secure and more efficient for everyone. Follow us on Twitter @MasterCardNews,
join the discussion on the Cashless
Conversations Blog and subscribe
for the latest news.
About EFL
The Entrepreneurial Finance Lab (EFL) is an innovative financial
technology company which employs psychometric and nontraditional
applicant data to create credit scores to measure risk and potential
among new and existing small businesses. After beginning with research
at the Harvard Center for International Development, EFL now works with
leading financial institutions across Africa, Asia, and Latin America,
and has been recognized by the G-20 as one of the most innovative
approaches to SME finance globally. Find EFL at www.EFLglobal.com
or connect @EFinlab.