A recent report says that more than 60% of millennials do not own a credit card. In the past few years, the model of instant credit has been picking up pace. Firms offering instant credit are set out to rethink how millennials borrow money. Instant credit is a way by which shoppers get access to real-time loan approvals for their purchase at a point-of-sale (physical and online) without using a credit card. The credit check is mostly done based on a host of parameters covering credit scores, social media data, merchant data and others. Lending space has become very interesting in the last few years. There are many overlaps between unsecured loans, credit cards, P2P lending, other loans and instant credit now. In fact, one might be replacing the other. Lending club loans are taken many times to pay off credit card debt. In the future, millennials might not keep many credit cards if they can just use Klarna, Affirm or Branch.
Branch, one of the firms offering digital financial services to mobile users, recently raised $9.2 million in its Series A round of funding. The round was led by Andreessen Horowitz.
Branch is a for-profit, socially conscious company based in San Francisco and Nairobi. The company uses technology to reduce the cost of delivering financial services in emerging markets. It aims to deliver world-class financial services to the mobile generation. The app stores and analyzes data stored on customer’s phones. Using the data, it anticipates the repayment rating of the customer and accordingly offers a credit line of anywhere from $2.50 to $500.
According to Founder and CEO Matt Flannery, “Branch's free Android app is a branchless bank for the next generation.”
How it works:
Customers can download the Branch app from the Google Play Store and can submit their application for a quick review. Customers will receive their loan which is conveniently sent to their mobile money account in minutes. They can repay the loan with their mobile money account.
Branch uses machine learning algorithms to process thousands of data points to assess customer’s credit profile and accordingly creates tailored loan products. The data is collected by accessing information on a customer’s phone through handset details, SMS logs, social network data, GPS Data, call logs and contact lists.
As a customer builds his/her credit history with Branch, the fees implied dramatically decrease and they can apply for larger loans on more flexible terms.
Here are the unique featres offered by Branch:
Commitment to Privacy and Security: Branch eliminates the challenges of getting a loan by using the data on a customer phone’s to create a credit score.
Fair and Transparent Services: Branch’s terms allow for easy repayment. The company does not charge late fees or rollover fees.
Innovative Product: Instant loan with world-class support
According to data, over 75% of Branch's customers use their loan to start or grow a business.