Information services company, Experian is working with VisualDNA, a provider of psychometric testing for the credit and risk sector, to provide financial services to people in emerging markets that are unbanked or underserved as a result of the current approach to credit scoring.
In a joint statement, the companies say this initiative will provide wider access to financial services in emerging markets.
According to VisualDNA, some 2.5 billion of the world's adults do not use formal banks or semi-formal microfinance institutions to save or borrow money. This is despite the fact that studies have shown how microfinance results in a 30% increase in the creation of new businesses and can significantly improve an applicant's quality of life, it explains.
In a study carried out by the company, 80% of the respondents said that being given access to additional financing would allow them to spend more money on education. It is also shown that two extra years of education would add 10 years to life expectancy and a complete primary education could increase earnings potential by 27%.
"VisualDNA's goal is to help people be valued for who they really are. Access to traditional lending is often a catch 22 with a lack of credit history preventing access," says Clare McCaffery, MD, cedit & risk at VisualDNA.
"Our technology has the potential to break this cycle and change people's lives for the better. Our research indicates that 80% of people given access to additional financing would use the money on education, something that has a profound impact on their future health and earning potential. The work we are doing with Experian is incredibly exciting and the results we have from our testing phase indicate millions of people could benefit in South Africa and Turkey alone."
Charles Butterworth, MD at Experian EMEA, says: "Our partnership with VisualDNA builds on Experian's position as a leading provider of decision analytics and scoring solutions. It means we can offer our clients new and proven ways to extend their services to many more people in emerging economies and this, in turn, means many people previously unable to obtain credit will have the opportunity to significantly improve the quality of their lives and advance their local economies through sustainable growth.
"This partnership offers people in emerging economies a serious and viable step up the economic ladder and we are working closely with our clients in a number of countries who are similarly committed to making this a success."
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