WB partners with Steward Bank

14

THE World Bank has partnered with Steward Bank in developing a decision-making system that allows local financial institutions to give out collateral-free loans.
Last week, the Cassava Smartech banking unit, in conjunction with mobile money service Ecocash, launched a collateral-free loan service, which it says is targeted at individuals and small businesses that cannot put up collateral for loans.
Paul Noumba Um, the World Bank’s country director for Zimbabwe, said the partnership is part of the multilateral lender’s pilot test of its new credit assessment toll.
“We have partnered with Steward Bank to introduce a key component of decision making when advancing loans to Small to Medium Enterprises, people who do not have the traditional documentation, who do not have a trail of records,” he said at the launch.
“So with the technology that we are pilot-testing with Steward Bank through our brand, Lendol, you will able to at least improve decision making. We are hoping that after the pilot, with Steward Bank having gathered data over a few months, we will be able to offer the technology to the rest of the financial sector,” Noumba Um added.
He said the decision making system uses “psychometric testing to assess” the likelihood of default for an aspiring borrower.
He also pointed out that financial technology is essential in “extending the boundaries of financial services” because it gives “wider and more efficient reach”.
“In as much as the institutions will want to preserve their competitive advantages, we all recognise that it is crucial for the financial system to have an ecosystem that can expand the boundaries of financial services,” he said.
Lance Mambondiani, Steward Bank’s chief executive, said his organisation would offer businesses collateral-free loans based solely on information from a psychometric test.
“We are going to offer businesses these loans without the need for collateral, we will simply ask you to complete a psychometric test and we believe that the information we get is all that we need.
“We know that many small businesses do not have anything that could qualify as collateral so it would be pointless to ask for collateral,” he said.
“We are grateful to our partners at the World Bank who assisted us in developing the algorithm that allows us to offer businesses these loans,” Mambondiani added.
Meanwhile, the bank also launched a platform where Econet mobile network subscribers will be able to open bank accounts through cell phones “within a minute”.
Codenamed *236#Bank, the initiative aims to exploit mobile phone penetration, which it says now stands at 11 million, to grow financial inclusion using the mobile platform.
newsdesk@fingaz.co.zw