How Branch Confidently Lends to People Banks Won’t Touch | Matt Flannery (Founder, CEO of Branch)

Matt Flannery is the Founder and CEO of Branch as well as the Founder of Kiva.
Matt Flannery and Branch have done something the banks have not: learned how to profitably lend to people who have little to no credit history. Matt is the founder and CEO of Branch, which issues small loans to millions of people in India, Nigeria, Kenya, and Tanzania.
He's also the founder of Kiva, a microfinance pioneer that skyrocketed from a small project into a worldwide nonprofit that Oprah and President Clinton loved talking about.
On this episode of CRAFTED., we learn how Branch uses data from people's phones to confidently make loans to people who don't have traditional credit scores. Plus, how they prevent fraud and avoid bias.
We'll also explore the wild ways that Branch is experimenting with Generative AI, including how they are creating “future synthetic data” that they believe will predict how users will save and spend in the future.
Takeaways:
- Branch uses AI to confidently lend to people without traditional credit scores
- Branch was built on traditional machine learning models - the name “Branch” derives in part from the “random forest” approach - and now is adding Generative AI approaches to the mix
- Branch is using GenAI to create “future synthetic data” that predicts how people will spend and save in the years to come. As Matt says, “It’s kind of a wild idea” and it’ll take a few years to see how predictive the approach is
- To avoid bias, lend to lots of people no matter what the data says. It will teach you what the “natural loss rate” is and prevent you from training your model on customers you’ve already selected as creditworthy.
- Preventing fraud is the biggest challenge. And you can go from zero fraud to massive fraud over a weekend if fraudsters discover a vulnerability.
- Branch is hugely successful in India, because of the approach it developed in Africa: lend very small amounts to lots of people and, as people repay, offer them larger loans.
- Branch failed in Mexico because the user experience of repaying the loan (visiting a local shop) was too difficult; meanwhile, another reason for success in India is the country’s recent rollout of a nationwide mobile payments system (UPI). Plus, the willingness to repay in India is naturally very high.
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CRAFTED. is sponsored by Docker and produced by Modern Product Minds.
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Modern Product Minds (Dan Blumberg, the host, and his team) advises companies on product, discovery, growth, and experimentation. Learn more at modernproductm...
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X: @mattflannery
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[@intebuddy]

I am an Indian, credit score only works for middle class and most of India's populus belongs to below poverty line. Credit score does not work for them, but yeah they take loans.
Formally known as loan from friends and family, officially its mafia regulated loan on 15-20% monthly interest.
What surprising is that, people in slums take this loan and majority will repay it, obviously there is nothing to save so they stay in slums and slums produce babies and grow in time being.
Central and State Goverments give large sums of social benefits to these people, but in developing countries like India its mostly get vanished by corruption until it comes to illiterate poor people. They dont know what they can benefit becauae they are illiterate and goverment spend on benefits all the time.