Founded in 2011, Mambu is a SaaS banking engine provider which is bringing the functionality of traditional core banking in a modern way. Initially, Mambu was looking at the emerging markets due to its large number of unbanked population, least amount of access to enterprise technology and the space to make the biggest impact. Particularly as emerging markets are hosts of a large amount of underserved micro SME businesses which presented a big opportunity for digital lending and banking penetration. Since then, Mambu has developed its solution and found new opportunities globally, where it helps a broad range of clients including tier one banksbring their loan and deposit products to market a lot faster on a fresh cloud stack beside their old cores.
Mainly when financial service firms plan to move into different segments such as lending or digital banking, the use of traditional core banking systems and processes make the move expensive and slow. Therefore, the market opportunity becomes commercially unattractive, says Eugine Danilkis, Co-Founder & CEO of Mambu. “Especially when banks bring modern user experience and build a new stack outside of the bank's technology stack. In this case they set-up something separate and give this subsidiary the operational freedom and a new brand so it is not hindered by the legacy technology and process the bank has.” Danilkis adds.
Speaking about the difference between emerging and developed markets, Danilkis says that one of the main differences is distribution and how credit scoring is done. In some emerging markets for example, “our clients are still going out to markets with mobile phones, speak to their business customers face to face, doing in person origination and understanding how their customers’ businesses work, but without branches. So business is done with limited traditional cost of branches, with mobile credit officers and mobile staff in the field. Whereas, developed markets do this almost all online, if not mobile based.” He adds “credit decisioning and scoring module is also part of the reason why the distribution process is different. In the western market, if you are doing SME or consumer lending, you have wealth of digitised data you can pull in, such as accounting data and credit score information about the directors which will help you make either a fully automated decision or inform 80% of your decision to help figure out the appropriate interest rate or products.” However, emerging markets don’t have these options yet, which is why they need more personal touch as the data needed to make this decision isn’t there or digitised yet. Even with the lack digitized data, they are still using as much automation as possible but the data has to be put in manually, then someone behind scene has to “crunch the numbers and come up with different KPIs”.
Danilkis concludes stating that progress with digitisation would be an important step to make lending accessible to SMEs in the emerging markets. Access to finance means that they would have the ability to grow their businesses, provide employment and bridge the financial inclusion gap that is holding back these markets.