Kenya’s Alternative Circle has signed an agreement with the international credit risk management company, Creditinfo Group, to the tune of $1.1 million. The seed capital will see Alternative Circle gain a wider geographical footprint, which will in turn open doors for greater opportunities for the mobile financial solutions innovator.
“Partnering with Creditinfo Group will not only redefine the way risk is evaluated in Kenya and the world but it will also bring on to the credit-ecosystem several SMEs that can now achieve their potential.”
-Kevin Mutiso, CEO, Alternative Circle
The strategic investment will enable Alternative Circle to gain access to consumer data that was unavailable before and thus better serve the lenders in facilitating access to finance, especially in the emerging markets. The expertise that Creditinfo Group has in classic and alternative credit risk management will facilitate in Alternative Circles’ goal of driving financial inclusion in the region. On the other hand, the strategic partnership with Alternative Circle is expected to further enable Creditinfo to gain extremely valuable consumer data that was not available in the market before.
“Seeing the turn that the credit risk management industry has been taking during the past few years, we are being proactive in finding alternative ways to create data which can be added to the ‘classic’ historical data on consumers held via our credit bureaus all over the world.”
-Reynir Grétarsson, Founder and CEO, Creditinfo Group
Alternative Circle is in the process of building a mobile-based microloan platform and they will seek to incorporate the Credit Scoring Technology from Creditinfo Group to effectively judge customers credit-worthiness. The app dubbed Shika is currently under testing mode and is expected to go live in July this year.
Alternative Circle promises to deliver mobile loans to a user’s mobile money account in 3 minutes. There is a 10%-15% “facilitation fee” (interest) charged for all transactions. Loans are initially disbursed for a period of 30 days (1 month) which will have flexible repayment schedules such as weekly payments.
Through this platform, Alternative Circle seeks to make access to finance available to a wider population. Shika is available for download to Android users on http://www.alternativecircle.com/ or shika-app.com.
Alternative Circle has partnered with the international Payment Gateway system, InterSwitch, to handle the disbursement of money. InterSwitch will also develop a digital card, essentially the Verve card, for Alternative Circle. This card is expected to be rolled out to customers in 6 months.
The start-up has also built a front end for Financial Institutions to access these loans through the same platform. They have done the heavy lifting and financial institutions only have to plug in by putting money into the lending pool and they can lend.
Shika will compete for the same market segment with the already established mobile based micro-lending platforms such as M-Shwari, Tala and Branch but it is different in one way. It also enables Financial Institutions to lend capital directly to end users without the need to build their own systems.