Using Fintech to Feed the World: Four Innovative Approaches in Smallholder Finance

First Access and FarmDrive are using alternative data to help banks lend to rural and smallholder clients: In the U.S., banks and other lenders use credit histories and FICO scores to assess creditworthiness when people apply for car loans, home mortgages and more. In countries like Ghana and Rwanda, however, most smallholders use cash only, have no bank accounts and don’t own property – leaving them without a credit history for banks to use in evaluating risk and justifying loans.

First Access is addressing this challenge by developing a technology platform and algorithm through which banks can create credit profiles for smallholders. By combining First Access’ own customer data with “hidden” points – such as consumers’ prepaid mobile money history or utility bills – financial institutions can assess smallholders’ creditworthiness and extend loans to individuals previously unreached.