As reported by AmeInfo.com, MasterCard and the Entrepreneurial Finance Lab (EFL) today announced a global partnership to promote small business (SMB) growth in developing countries.
The partnership was at the annual banking conference, SIBOS, and provides international issuers in developing markets with new tools to help improve credit underwriting for unbanked small businesses.According to a statement from MasterCard, within emerging markets, SMBs are often shut out of the financial system due to a lack of traditional prerequisites for finance, including reliable credit bureau and bank performance information being available to financial institutions.
“Around the world, SMBs lack access to low-cost financing, and banks are handcuffed from lending by lack of data on them. In developing countries, only 20% of SMBs have a positive bank performance while only another 20% have credit bureau references,” said Ed Glassman, Group Executive, Global Commercial Products & Solutions at MasterCard.
“With EFL’s innovative credit scoring tool, even the smallest business will be able to join a payments network, avoiding the inefficiencies and risks of checks and becoming able to compete for the same customers as the largest global retailers,” he added.
EFL’s psychometric risk-scoring technology narrows the financing gap for high potential, growth-generating SMBs, by providing a unique vetting process that evaluates business acumen, honesty and integrity. Through the partnership with EFL, MasterCard is extending its strategic mission of financial inclusion across all customer segments and regions.
Among the first banks to benefit from the partnership is Banco BHD of the Dominican Republic which will utilize the EFL model to credit score MasterCard small and medium size businesses credit cards in addition to its traditional SMB term loan business.
MasterCard and EFL are working globally across Latin America, South East Asia, the Middle East and Africa to promote the use of psychometric scoring as an alternative to traditional credit scoring, where SMB credit underwriting challenges exist.
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