The majority of the developing world population makes little use or no use of financial services. Accenture estimates that only 70 percent of microenterprises in an emerging country like India use bank accounts while only 5 percent use products like term loans, and a paltry 1 percent have working capital loans from banks. In similar emerging markets, lenders find it difficult to make credit decisions due to weak coverage of credit rating agencies. On average, only 10 percent have credit scores.
One company that understands the riches lying at the bottom of the pyramid is Entrepreneurial Finance Lab (EFL GLOBAL). EFL helps lenders capture untapped markets by delivering credit scoring technology tailored for such markets.
How EFL Uses Psychometrics to Determine Credit Risk
EFL Global is a pioneer in psychometric credit scoring and was founded in 2010 by Dr. Bailey Klinger and Dennis (DJ) DiDonna. The company is headquartered in Miraflores, Lima, Peru.
Dr. Klinger is executive chairman. Prior to co-founding EFL, he served as a senior advisor and consultant to various government and multilateral institutions. DiDonna is chief strategy officer. Previously, he worked at MCM Strategic Data and Angie’s List as a technology entrepreneur with a background in sales and operations management.
The PitchIt startup awards is one of the best and most exciting parts of the LendIt — a lending conference. This year, there were eight finalist competitors who met in front of hundreds of investors to pitch. Four judges picked the ultimate winner, Nova. Below are the profiles of Nova and the seven other PitchIt finalists.
Nova — Credit History for Immigrants
Nova is the world’s first cross-border credit agency. Many immigrants come to the United States with no credit history. They may come from a place where credit is not an option. In many countries of the world, banks do not issue credit cards. There may not even be many, if any at all, banks. Merchants do not offer purchases on credit, so when these immigrants land on U.S. soil, their ability to interact with the economy is limited by the options they had in their native countries. Nova solves that problem.
It started as a research project at Stanford University. U.S. property managers run credit and background checks on applicants to screen for potential risks when leasing or renting housing units. Those checks typically do not include overseas credit checks. With Nova, property managers have that ability. Not only can U.S. landlords check overseas credit, but they can also report negative actions so that the credit report is affected in the applicant’s home country.