Tag Archive: Goldman Sachs

Silicon Valley-Backed Start-ups Disrupting the Financial services in Emerging Markets

Anyone who knows about the problems associated with the lending industry  in Africa, especially for women enterprenuers or SMEs, would definitely understand what Hilary Clinton was talking about on  ‘the Goldman Sachs 10,000 Women: Proving the Case for Women Entrepreneurs’-She said, “It’s a big market and somebody’s gonna serve it”

Lack of funds for Micro and Small Enterprises still remains one of the greatest obstacles to economic growth. It’s not a secret that many SMEs in developing countries are not catered to by banks because they are perceived as high risk category. But that’s slowly becoming a thing of the past, thanks to the power of digital information.

Well, finally someone has decided to disrupt the financial services industry in the emerging markets. A few Silicon Valley-backed start-ups are slowly stepping into the business of lending to micro / small business entities engaged in Agriculture, Farming, and Manufacturing, Trading, Transport and Logistics. They are looking to support SMEs, Microenterprises and grant them access to much needed capital.

So, who are they and how do they work? In Kenya for example, Saida  one of them, which uses information collected from Apps to look at how people use their smartphones and in turn analyse the data and the users’ behaviour traits to place them on a credit worthiness scale. (How excatly does Saida work?)

Another similar one is Branch, a for-profit, socially-conscious company based in San Francisco and Nairobi. Branch was co-founded by Matthew Flannery who is also the co-founder of KIVA.Org.  Similarly,  Inventura  and Lendup are other great technologies among many, that are helping to solve the problem of limited access to financial grants in emerging Markets.

More on how these App-based Lending startups operate 

Thanks to technology, a  report by Omidyar Network suggests that between 300 and 580 million people without a credit rating could benefit from app-based lending.

 

More depth information about the “Lending Startups Look at Borrowers’ Phone Usage to Assess Creditworthiness” On WSJ

Wall Street And Pope Francis

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Pontiff’s scepticism about capitalism may not have been everyone’s favourite topic. Atleast not to the ‘solely money and profit’ minded people. But i am glad more financial professionals are beginning to spot the need to show concern about human welfare and advancement. Some may wonder, “Why much effort to focus on showing love for humanity in a world where showing some compassion is close to none?” The answer is right there-” It’s starts with you, anywhere, anytime!” It’s starts with everyone. I agree, this may may not be easy as it sounds, especially in a world where people are mostly profit oriented and all that matters to most is money, power, technology and materials. Inequality in today’s society and the growing gap between the rich and the poor is no news to our ears. The imbalance of distribution of wealth is sharply visible.

Nevertherless, Pope Francis criticism on money and wealth matters is a reflection of what he himself has already gone through. I like to think that he is preaching what he practices and vice versa. This for example is reflected in the case of the Vatican Bank (also known as ‘The Institute For the Works of Religion (IOR)’ ), where the private bank was linked to money laundering, financing terrorism and tax evasion. Pope Francis worked further on the reform efforts started by his predecessor Pope Benedict XVI to ensure that the bank was complying with international banking standards and other transparency rules. Among his actions, he also replaced many bank’s advisors and to mend it’s secretive ways. Although Pope Francis went beyond making the bank more open in its business dealings and changing its mission to emphasize helping the poor, the best economic news were that the private bank tremendously improved and is making huge profits.

(More on ‘Reforming The Vatican Bank’ can be found on the Huffington Post)

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Indeed, the Pope’s criticism was warmly welcome by a few financial institutions professionals at the wall street.  Of course this is not to say that they waited until the Pope said something. In fact, certain corporations and  financial instituitions had already started doing this. And through his criticism on this issue, many more are now slowly taking part in philanthropy and social investments and are striving to impact the society in a positive way. More organisations are taking part in the sustainable social investments. In fact when it comes to investment banks and financial institution catering for the poor and needy, i like to give a practical example of Goldman Sachs 10,000 Women. I followed up on their citizenship program especially in underserved economies like Africa and parts of  Asia and South America, where the instituition  empowered women entrepreneurs in Africa by giving them access to an educational training and enabled them to start sustainable businesses.

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On another article by K.J. McElrath, i  fully agree with the author that Pope Francis actions of eliminating a few traditional practices in the banking industry is simply a way of sending a strong message to the for-profit banking industry, to show them that profit making and considering the needs of  low-income people can be done without oppressing them. In third world countries, even though micro finances are proving that banking with the poor can be successful, i strongly believe the traditional banking institutions should rethink their ways of catering for the underserved economies and aggressively take part in addressing the issues of poverty and social justice.