InSight: Mobile accounting and financial inclusion in emerging markets

InVenture  | India

$100,000 | Stage 1: Proof of Concept | Economic Growth & Trade

The problem: Access to credit for small and medium-sized enterprises

In developing economies, most micro, small and medium-sized enterprises (MSMEs) do not have the financial tracking systems that lenders use to assess their creditworthiness. This lack of formal information has contributed to an estimated 70 percent of MSMEs not having access to external capital from financial institutions (and leaving a possible $2.5 trillion gap in needed funding). If small businesses are to be engines of an economy, they need access to growth capital. But on the flipside, if financial institutions are to lend to small businesses, they need information about potential borrowers, but not at too burdensome a cost.

The solution: Mobile accounting and financial inclusion 

InVenture, an award-winning social enterprise, is developing a two-pronged solution to this information problem. With its partners, InVenture has developed a text-based financial tracking tool called InSight. It can receive and process data from managers of small businesses, to assist with daily accounting, budgeting, and tracking loan balances, and works on any mobile device that sends and receives text messages. The data from InSight can be shared with financing organizations to help them evaluate the creditworthiness of loan applicants, and monitor performance of existing borrowers in their portfolio. InSight is designed for licensing to MFIs, NGOs and other social enterprises as a flexible data collection tool. The data will eventually be provided to rating agencies and government organizations to create a standardized credit scoring system for business owners seeking new financing at competitive rates.

The potential: Cost-effectiveness, impacts, and implications

With support from DIV, InVenture will pilot the InSight tool in India, where it aims to serve 10 financial institutions  and reach 500,000 individuals by 2014. InVenture will evaluate the tool’s ability to increase financial literacy among users, as well as measure micro-business growth and savings rates. India’s 145 microfinance institutions, with 31.7 million active borrowers, is a market that is projected to grow by 10% per year. As a first mover in the business of outfitting lenders to easily monitor small loan performance and help small businesses track their financial performance, InVenture plans to scale rapidly. Within five years, InVenture aims to help 10 million people who currently rely on the informal financial sector obtain credit scores.

To learn more

Last updated: August 01, 2013

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