Tiaxa and its CFO Olav Carlsen were featured in the Spring/Summer edition of DB’s 3D Social Enterprise magazine.
Tiaxa Mobile Credit
“Using mobile phones to pay bills and transfer money is well established in many developing countries. Providing unsecured credit in this way is a new concept” Olav Carlsen CFO, Tiaxa
Tiaxa is using the mobile phone to reach the millions of people not served by traditional financial services. Mobile telecommunications play a pivotal role in unlocking social and economic progress. The World Bank estimates that 2.5 billion people in low- and middle-income countries are unbanked. The mobile phone has the potential to bring financial inclusion to these communities through mobile phone-based financial services. Tiaxa is a leader in its space. Founded in Chile, the company has expanded to serve communities around the world, in countries throughout Latin America, Africa, Asia and even Europe. Its niche is in the digital delivery of nanocredits: short-term unsecured loans of USD 50 or less.
Tiaxa entered the nanocredit market by giving airtime credit to prepay customers of mobile phone networks. This service allows users to continue to make calls, send messages or download content when they have a zero balance. The credit is repaid when the customer tops up their balance.
Building on the success of this model, Tiaxa has developed a new nanocredit service that provides mobile phone users with cash advances. “The practice of using mobile phones to pay bills and transfer money is well established in many developing countries. Providing unsecured credit in this way is a new concept,” says CFO Olav Carlsen. The potential for personal empowerment is huge: “If you run a small business with an income of USD 50 a month, being able to borrow USD 15 for working capital makes a big difference. Prepayment is the norm for consumers in emerging markets. Run out of money and you have no electricity, so no heat, no light, no hot meal. In these situations, access to credit can really help with life.”
Using big data analytics and credit scoring capabilities, Tiaxa analyzes the behavior and payment history of users to determine the amount of credit to advance. Users can get more credit on better terms as they demonstrate their reliability. Following successful first deployments in the Philippines and Cambodia, Tiaxa will use its ECC loan to extend its credit services into markets in Asia and sub-Saharan Africa, with Latin America on the horizon. With a unique position at the intersection of financial services and telecommunications in the developing world, and a database expected to cover 500 million mobile phone users by 2016, Tiaxa plans to continue generating opportunities for financial inclusion.