Bangladeshi operator Robi has launched a smartphone financing campaign called Phone Loan, to enable customers to buy new smartphones on credit. Using the Alternative Credit Scoring (ACS) service, which is powered by blockchain and big data analytics technology, the handset financing campaign mainly targets customers who need loans to purchase handsets.
The Phone Loan campaign offers handset loans to eligible customers who do not have credit cards. Robi plans to identify eligible customers based on their data usage. Eligible customers will be notified through SMS and provided with details related to handset financing, after which they can check their eligibility through the Phone Loan app or the operator’s website. Eligible customers can purchase handsets from Robi’s walk-in-centers, the Phone Loan app and the operator’s website by making a one-time down payment, with the rest of the amount to be paid in equal monthly installments from six to 12 months.
While we do not know the exact terms of Robi’s loans, we find this offer notable for several reasons. Like many developing countries, Bangladesh has a significant subset of the population which has limited or no access to conventional banking and credit. This is exactly the population that has been so well served by mobile money platforms, by which MNOs have been able to forge mutually beneficial relationships with them. In the case of the present offering, Robi is faced with the problem of customers and potential customers who need smartphones in order to partake of the operator’s services but lack the funds to purchase them outright and also lack credit histories.
In order to get devices into the hands of these consumers, Robi has chosen to use Alternative Credit Scoring, a widely accepted protocol for evaluating the risks of lending to those who suffer not from bad credit but from no credit at all, as they have not had the opportunity to establish a credit history. ACS relies on such data as utility bill payments, rent payments and—particularly relevant here—mobile phone bill payment histories. Thus, the operator is in a particularly good position to evaluate the eligibility of its own customers for phone loans.
Getting handsets into as many hands as possible is key to the maximizing of the business of MNOs, and nowhere more so than in developing economies. If lack of credit leads to lack of access to mobile networks and mobile data in particular, operators as well as potential customers will suffer. Therefore, offers such as Phone Loan are win-win. The only issue, apart from the creditworthiness of those who participate, is the financing of the phones. If the interest rates are too high, customers will default, or the program could fail to get off the ground.