At some point in our lives, we’ve all been involved in a financial emergency. For many including middle-income families, this became a painful reality in the wake of the coronavirus. Unfortunately, access to financial resources remains to be a challenge. Often simply due to a lack of collateral by those who need it most. But the deeper underlying issue to build trust between financial institutions and individuals. Collateral has been the go-to approach for years, but in the age of data, there are other ways to build trust.
This is the issue that Moneta, which describes itself as a lifestyle based financial service enabler, aims to solve. Having obtained seed funding through the Google Startup Accelerator and PickMe Incubation programme, Moneta created a credit scoring engine that harnesses data to understand individual ‘social trustworthiness’ it aims to offer personalised financial assistance for middle-income consumers. In turn, allowing them rewards and financial facilities to live beyond their limits in life.
Describing the problem, CEO of Moneta, Shayanthan Kanaganayagham explained, “Each of us has varying financial needs at different times. In the traditional setting, building trust and getting access to finance that meets our personal needs is very limited and a time-consuming process. But what if we have a good discerning friend who has a deep understanding about our needs, lifestyle and trustworthiness and enables us with a high trusted community and financial facilities whenever we need it in a super fast way. Our life will be sorted!”
Building trust and access to credit
To understand the challenges of obtaining credit we need to visit how it’s given in the first place. In Sri Lanka, financial institutions rely upon the information provided by the Credit Information Bureau of Sri Lanka (CRIB) to make trusted decisions about customers when offering access to credit. The agency, which operates as a private-public partnership, was established in the 1980s to ensure financial institutions had readily available access to credit information. In turn, ensuring good credit culture and clean credit.
To achieve its goals, the agency maintains a growing database of credit information. It contains records of all financial borrowing of an individual. Banks and other financial institutions rely on this database by consulting CRIB to identify the creditworthiness of an individual before making any lending decisions. If your credit history looks positive then there’s nothing to worry about. Otherwise, you’ll find the entire process from obtaining to repaying credit to be challenging.