US$4 billion US-based venture capital firm, Andreessen Horowitz has announced a whopping US$9 million investment in Branch, a San Francisco- and Nairobi-based company that’s using tech to reduce the cost of delivering financial services in emerging markets.
The funds will be used to hire more hands, launch Branch in new geographies (Branch has already launched in Tanzania) and make the service the best branchless bank in under-served regions across the world.
Branch is solving an age-old problem: access to credit.
The app works by referencing a user’s phone with permission and analyzing the data such as how much he/she spends on mobile data and who they call frequently, stored on it.
Through a combination of techniques, the Branch app learns and predicts users who are likely to be good borrowers. Users can get a credit line from US$2.50 to US$500 in a few seconds, which is transmitted digitally via M-Pesa
One thing that hinders access to credit is credit history/score. In fact, in the developed world, it usually goes down to this catch-22: You can’t get access to credit unless you have a credit score, and you can’t get a credit score unless you have access to credit.
However, Branch doesn’t work this way. It doesn’t demand credit history the way of the traditional bank. Instead, the users’ phone data is used to create a credit score (a lot of users will have an amazing credit score, trust me)
“The combination of smartphones, digital money, and machine learning offers an opportunity to leapfrog old-fashioned credit infrastructure, and that’s precisely what Branch is doing,” Andreessen Horowitz stated in a post.
It added, “It’s like a combination of propriety credit bureau and bank all in one, all wrapped into an Android app that anyone can download.”
The Branch app is already gaining traction. The app is popular with sole proprietors and entrepreneurs, especially farmers, drivers and merchants who can borrow from US$2 to about a hundred dollars and repay in a few days or weeks.
Existing seed backers, Khosla Impact and Formation 8 also joined in this US$9 million series A round.
Branch has a simple mission: to deliver world-class financial services to the mobile generation. Its team of six data scientists and engineers in ‘San Fran’ and 30 employees in Nairobi are working tirelessly to ensure this is achieved.
Life moves faster than the pace of bank queues. Download Branch from the Google Play Store and start using it today!