Dat Haba of MobiKredit
Today we are joined by Dat Haba from MobiKredit.
MobiKredit is a Fintech company that uses mobile prepaid data for credit risk assessment for the U.S. underserved banking population, many of whom have little or no credit history.
Our questions are in bold.
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Who are you and what’s your background?
I’m Dat Haba, founder of MobiKredit. My background is in the mobile world. My mobile career began as an intern for Tele Denmark A/S (TDC), the largest mobile operator in Denmark. Later I joined MIGway. It was an exciting time, not only because MIGway was a young startup, but it was also the world’s first business-to-business (B2B), data Mobile Virtual Network Operator (MVNO). Think Virgin Mobile but without voice service, and its clients are other mobile operators and the business enterprises.
Even now, I think there are only 93 MVNOs who offer data-only services via dongles, tablets etc. But the idea was unheard-of, even to some telecom professionals at that time. Thus, new business models and sales approaches had to be in place; new innovations to overcome technological challenges were invented. All in all it was fun and intoxicating.
It was there where I first learned about the importance of mobile data. Data mining was nothing like it is now. It was very basic – nothing more than just a broad overview about users’ adoption rate, users’ usage patterns and frequencies. It was also there where I first worked with Fintech, rolling out banking services via mobile. Again this was in the early days of Fintech; and thus, the service was limited to SMS based, or SMS banking, and later WAP access.
What is your job title and what are your general responsibilities?
My job title is Founder. MobiKredit is a young startup. This means that our main goal is to get funding for the company in order for us to move on to the next stage of development. And as a founder, I hold full founder’s responsibilities: mobile credit evangelist, fundraiser, sales & business development…
Can you give us an overview of your business?
MobiKredit is a Fintech company that uses mobile prepaid data for credit risk assessment for the U.S. underserved banking population, i.e. millennium, African American, and Latinos. We develop an analytics platform to deliver credit scores using mobile phone behavioural data. Our goals are to help the US underserved population to build up their credit histories and to help operators and their partners to profitably serve this population.
Tell us how you are funded.
Bootstrap so far.
Why did you start the company? To solve what problems?
Sixty-four million Americans don’t have credit scores, which make them invisible to the mainstream U.S. financial system. They have little or no credit history and often don’t have a bank account. Lack of financial inclusion makes it particularly hard for low-income workers to get ahead.
The majority of this group are millennium, African American or Latinos, and most of them are mobile prepaid customers. For mobile operators, the challenge is to create more value from this group. Yet since very little information is exchanged between the prepaid customers and operators, how do operators manage a relationship with customers they barely know? As a result, operators resort to blanket promotions that risk destroying value by needlessly cutting prices or offering free handsets or services. Adding to the challenge, prepaid customers are often disloyal. They are, in fact, twice as likely to switch provider than postpaid subscribers.
And this is where MobiKredit comes in. By mining the detailed usage patterns hidden in operators’ existing data on prepaid customers, we provide operators with credit risk insights and correlations that had formerly gone unrecognized or been ignored, because it had not been considered possible to analyse them.
Our mobile credit solutions, like Emergency Airtime Top Up and Handset Finance (Device Payment), help operators to get the most out of their prepaid segments, i.e. increase ARPU and reduce churn. At the same time, the solutions help prepaid customers, i.e. the underserved, to build up their credit score, leading to increased access to formal financial services. We also work with financial institutions to help lenders more accurately evaluate credit risks of the thin or no file customers.
Who are your target customers? What’s your revenue model?
Mobile operators and financial institutions. Revenue will come from these two groups.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
With small towns and inter-city neighbourhoods losing their access to financial access due to bank deserts, I would bring back postal banking. As stated on the Campaign for Postal Banking website, “postal banking is simply the provision of low-cost, consumer-driven financial services via the Postal Service. Products and services could range from check cashing to bill payment to savings accounts to small-dollar loans”.
Post offices, with more than 30,000 post offices in virtually every community in America nearly 60% of which are in ZIP Codes where there is only one bank branch or none at all, could easily fill this void left by the banks. And it would alleviate the amount of money ($89 billion in 2012) that the underserved collectively spend in interest and fees on alternative financial services, like payday lenders.
What is your message for the larger players in the Finance industry?
My message is not to the larger players in the Finance industry, rather it is to a group of players who has the potential to disrupt this industry and so far has been sitting on the sideline – mobile operators in the U.S.
When we talk about Fintech, the operator is the Sleeping Giant – one that has great but unrealized or newly emerging power, and one that can turn the financial industry upside down. Unlike most banks, operators have a true mass market vocation, well-known brands that are relevant for the masses especially the poor, experience running extensive third-party retail channels, a deployed base of smartcards (SIM cards) with secure identity elements, and an increasingly ubiquitous mobile network that can be used for remote real-time transaction authorizations and confirmations. Their mobile payment initiatives so far are more about affluence and advertising, and less about access. But access to financial services should be their key focus.
Let me give you a couple of examples where focusing on access to financial services has paid dividends to the operator. In the developing world, hundreds of millions have recently begun using their mobile phones through an entirely new method of banking which is called “mobile money.” The most well-known system, M-PESA, launched by Kenya’s largest mobile network operator – Safaricom. With 18 million customers and more than 80,000 agent outlets, M-Pesa has altered the landscape of financial services in Kenya, and is expanding rapidly in Tanzania. Telenor Group is another telecom operator that is getting heavily involved in financial services in developing economies. Telenor’s money transfer service, Easypaisa, has 13 million customers, and this financial service accounts for 9 percent of Telenor’s total revenue in Pakistan. And guess what? It is profitable to serve the low-income segment.
Nearly one-third of the U.S. population—106 million people—are either underbanked or unbanked, and most of them are prepaid customers. U.S. operators need to rethink about this segment that they are currently ignoring.
What phone are you carrying and why?
A hand-me-down iPhone 5 or 5S. I don’t really know which one, and don’t really care. Why? I did mention hand-me-down right? Hand-me-down phone = free phone. … 🙂
Where do you get your industry news from?
American Banker, Mobile Commerce Daily, GSMA, NPR’s Planet Money. Forbes, Financial Times and TechCrunch.
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Paul Breloff, @paulbreloff, Fintech investor for social good Fintech, Arjan Schutte, @arjanschutte, another Fintech investor for social good Fintech, and Daniela Busse @DesignFuturing design futurist and innovation designer for future roadmap ideation.
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Paul Breloff or Arjan Schutte.
What’s the best FinTech product or service you’ve seen recently?
Acorns is a financial platform that helps users to save automatically.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
The most exciting area of Fintech innovation is the use of data. Several Fintech companies are experimenting with new credit-scoring approaches—ranging from looking at colleges attended and majors for international students to determine people’s creditworthiness, through their mobile data usage. Big data analytics helps these companies to identify new business opportunities, leverage existing infrastructure to create new products to meet customers’ needs, and give them competitive edge they didn’t have before.
The rapid proliferation of mobile and Internet usage allows for the collection of unprecedented amounts of data, especially here in the US. Thus in the next few years applying data to tackle social problems will be big. We’ve already seen many Fintech companies used this model to make considerable difference for underserved communities. Beside Micro Lending Access, e.g. Lending Club, I believe that there are other five areas in which Fintech can help the underserved communities: Cash Flow Analysis, Price Transparency in Remittances, Identification, Automation and Control, and Expanding Rural Access.
In a world where more than 90 percent of data has been created in the last two years, Fintech companies and their data innovations hold great promise in bringing positive changes in reaching the underserved population in the U.S. It will be an exciting time.
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Thanks to Dat for his answers today. You can find out more about MobiKredit on their LinkedIn page.
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