1. Who are you?
We, Benedikt Kramer and Philipp Neub are the founding team of BCB Biometric Credit Bureau.
BCB Biometric Credit Bureau offers services tailor-made to microfinance institutions and Savings and Credit Co-operatives in sub-Saharan Africa. BCB collects and analyzes personal loan/credit information using a unique, low budget IT solution. BCB is the pioneer efficiently and comprehensively covering the bottom-of-pyramid population.
Led by the mission to drive financial inclusion we will significantly contribute to improvements in data availability and quality, process efficiency, and transparency. This will be achieved by biometric identification, electronic data capturing, and real-time data transmission and processing. By means of the resulting reduction of risk and corresponding interest rates we will bring the informal financial sector closer to the formal, regulated sector. The availability of personal credit histories will allow for loan conditions matching an individual’s risk profile thus driving financial inclusion.
2. Which services do you sell and who are your competitors?
Mobile Office – improving end-consumer interaction
BCB’s mobile office consists of a tablet PC with an attached fingerprint scanner and a software application (app) facilitating data capturing in-field. All of an end-consumer’s and loan officer’s fingerprints are captured to solve the present uncertainty issues with regards to identity resulting from the absence of ID cards and frequent use of counterfeit cards. Ultimately all end-consumer interaction will be handled via the device to keep the database up-to-date.
The app is designed to standardize data capturing occurring from any end-consumer contact across the industry and to improve data quality. It is affordable to financial institutions regardless of size and has been developed based on first-hand customer information and tailored to their specific needs (e.g. a very intuitive, dynamic graphical user interface). Implementation of the Mobile Office in any financial institution will result in significant process efficiency gains. Besides cost reductions this will also result in a sped up lending process.
Management Information System (MIS) & Customer Relationship Management (CRM) system – powerful monitoring and reporting tools
BCB puts its customers in a position to access and process the data entered via the mobile office. For that reason, a CRM system is provided free of charge. The system provides summary overviews of an institutions’ clients, detailed views of client information, and various search and filter functions. Combined with the CRM system comes an MIS which provides for portfolio monitoring and reporting functionality. The majority of BCB’s customers presently do not have any possibility to view aggregated data on their loan or lending portfolios. The effort of aggregating information spread over numerous paper-based lists is too time consuming and data quality often at least doubtful. BCB’s MIS for the first time ever puts them in a position to view aggregated portfolio information – even in real-time.
Credit bureaus (CBs) in Africa – private and public ones – target the formal, regulated financial sector leaving the unregulated sector untouched. Main reason is the difference in the modus operandi between the formal and informal sector. Whereas formal financial institutions usually work with digitized data, informal ones mostly work completely paper-based. CBs typically wait to receive information so they can process it. Since this passive approach is not suitable for the informal sector we go beyond the usual credit bureau activities. With the exception of four countries in Southern Africa coverage ratios are still less than 10% of the adult population keeping established CBs busy covering formal sector clients.
Three main non-credit bureaus can be seen as competitors for BCB – social media providers, payment processing companies, and mobile network operators. Nevertheless, all of the mentioned only to a very limited extend collect relevant data for the creation of credit reports or they target the upper levels of society (e.g. social media and payment processing companies).
3. How did you get your start-up idea and how did you finance your start-up?
Three years ago Benedikt did an internship with the International Advisory Service in Kenya. During the internship he came across many different stakeholders from the microfinance sector and they all talked about the same problems, mainly lack of identification of their clients and multi-borrowing. This is where the idea of a biometric based credit bureau emerged from.
The idea about providing IT infrastructure came later after getting to know the major challenge and reason for prevention of credit information sharing is the paper-based operations of most microfinance institutions.
4. What were the biggest challenges in starting?
Capital is always a scarce resource. After self-financing several visits to the first target markets, prototype development, and a pilot test in Uganda where we managed to achieve the proof of concept we are now looking for our first external investor to kick off and expand our services. Main issue for BCB is that we cannot show revenues yet. Nevertheless BCB is an infrastructure investment, with high upfront-costs and return coming in later.
5. What areas within FinTech do you personally find most interesting and why?
Mobile money is a very interesting topic to look at. Especially when looking into markets like Kenya where M-PESA, the first real mobile money product, was invented and kicked off. Within a couple of years the whole financial sector was boosted in terms of numbers, new products and financial inclusion. But in spite of the different starting position with large parts of the population having regular access to the Internet as opposed to Africa we also see some potential for mobile money solutions in the DACH region. Especially the younger generation is mobile affine and we already see an increasing number of use cases for payments of smaller amounts such as tickets for public transportation. Those and other regions of the world can learn from the experience made in African countries, especially when it comes to testing high-growth, innovative solutions.
6. What opportunities do you see for FinTech start-ups in the DACH region, and how can we help to accelerate it?
FinTech start-ups in the DACH region have the possibility to hark back to highly skilled employees and entrepreneurs. Nevertheless, a personal feeling is that the financial sector in the region is rather old-fashioned compared to other regions just like sub-Saharan Africa where mobile money was invented and people are still eager to go for the next big thing. Other than in Africa in the DACH region the infrastructure is already built and nearly all clients are banked, whereas in Africa most people are unbanked which bears a huge potential for new innovative solutions such as BCB. This is the reason BCB chose the middle way; with some central functions managed form our headquarters in Germany we serve the emerging middle class in Africa with well-trained local staff with offices on the ground. Building infrastructure for a credit bureau requires some effort but holds promising returns, social and monetary.
7. What tip would you like to give FinTech entrepreneurs?
Think how to solve occurring problems in the financial sector and never loose contact to your end-consumer. During all steps they need to be involved and feedback needs to be input. Further, it is not all about the next funky app. There is always a way to find potential to improve processes or increase user experience which will secure growth and client satisfaction.