SC Ventures, the innovation, fintech investment and ventures arm of Standard Chartered, has entered a Memorandum of Understanding with digital lending platform Yabx, aiming to address the need for responsible consumer finance across Africa and support financial inclusion in the region.
SC Ventures and Yabx revealed plans to take advantage of Africa’s recent digitisation of its financial sector. The covid-19 pandemic largely accelerated this development, and Africa now has over 700 million mobile wallets.
Residents of the continent also have around 450 million bank accounts collectively. Despite this, access to formal credit has remained constrained due to poor credit infrastructure and the slowly evolving risk appetite of financial services players, especially traditional banks. In response to this issue, SC Ventures and Yabx look to create a new Africa-specific product range to increase access to credit for the unbanked.
The two companies understood that a collaborative effort was best, given the scale and complexity of the challenge. They explained that flexible future-ready technology, along with data analytics could reduce the cost of delivery of innovative credit products. The prediction of cost could increase inclusion amongst the most currently underserved parts of Africa.
Loans will also be provided to customers for education and skill development, using a data-driven scoring and analytics engine. The loan products will initially launch in Uganda, eventually expanding to other countries across the continent.
Serving the unbanked ‘through purpose-driven loans’
Jiten Arora, Member SC Ventures, said: “We are excited at the prospect of using a data-driven, technology-enabled partnership model to serve the underbanked through purpose-driven loans in Africa, a continent which we have a deep understanding and a strong commitment towards.”
Manoranjan Mohapatra, CEO at Comviva, commented: “Yabx has seen exponential growth over the past year, and we will continue to invest in its mission to serve millions of consumers and MSMEs in emerging markets who have limited traditional sources of funding available to them.”
Rajat Dayal, CEO of Yabx, said: “We have a lot of synergy with SC Ventures in Africa and together we are uniquely positioned to create a seamless embedded finance experience. This partnership further bridges the gaps in the current market, driving digital innovations and bringing significant benefits to the underserved population of Africa.”
Fintech Yabx, headquartered in the Netherlands, expanded into Africa at the end of 2022, after partnering with a number of Nigerian banks. The venture aims to support banks offer a wider range of services. It also looks to allow banks to launch products including Buy Now Pay Later, personal loans, payday loans and more.