Mobile lender Branch raises Sh7bn for loans

Banks and fintechs give loans to millions of Kenyans via mobile phones. FILE PHOTO |NMG 

In Summary

• Funding to drive growth in more countries, says CEO
• Branch uses an individual mobile phone owner’s calling and social media habits to determine creditworthiness.

By JAMES KARIUKI
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Nairobi mobile-based money lender Branch International has raised Sh7 billion in a second round of funding to power its expansion into more countries.

Chief executive Matthew Flannery said part of the funds will launch operations in India as well as expand the product offering to include a savings and payments’ platform in markets where they enjoy one million customer base.

“Branch processes tens of thousands of loans every day, in amounts ranging from Sh250 to Sh5,000. The company’s growth rate is 20 per cent on a month-over-month basis and expects to disburse over Sh25 billion in 2018,” he said.

The Series B investment, led by Silicon-based Trinity Ventures, combining debt and equity, also saw the participation of Victory Park Capital, International Finance Corporation (IFC), Andreessen Horowitz and CreditEase Fintech Investment Fund.

Branch International’s announcement is just the latest in a series of large investments in financial technology in emerging markets, specifically Kenya.

Victory Park Capital and the International Finance Corporation (IFC) have established a new fund targeting financial technology companies in Kenya.

READ: Facebook-linked mobile lender raises Sh200m for M-Pesa loans

ALSO READ: Virtual lender Branch Kenya loans hit Sh3.6 billion

Call and social media habits

Branch, with offices in San Francisco, Lagos (Nigeria) and Nairobi uses an individual mobile phone owner’s calling and social media habits to determine creditworthiness.

Trinity Ventures general partner Schwark Satyavolu said expanding use of smartphones in Kenya and other emerging markets coupled with lack of access to credit was good opportunity for them to invest in.

“Because of the confluence of these two megatrends and because of the team’s incredible bench of talent, I am excited to invest in Branch and am bullish on its future,” he said.

Increased interest among venture capitalists in financial technology startups follows an emerging trend where tech-savvy young people aged below 35 years use smartphones to access most services and also to pay for goods.

A recent survey by FSD-Kenya indicates that most banks and fintechs had dished out over 80 per cent of loans to 6.5 million Kenyans via mobile phones where 31 per cent was spent it on gambling.

While borrowing to meet basic needs as well as replenish stocks in small businesses were the main reasons for digital borrowing, 800,000 Kenyans reported taking several loans to repay others.