The Rise of the Data Scientist: How big data and data science are changing smallholder finance

Published on

February 2, 2016
The eleventh briefing note in a series from the Initiative for Smallholder Finance explores how innovative lenders are using new data sources and analytics to assess the creditworthiness of borrowers. The full report is available for download here.

The enormous gap between the supply and demand of formal credit for smallholder farmers is caused, in part, by the extreme lack of information available to lenders on potential borrowers. The lack of information create risks for financial institutions and limits their willingness to lend to smallholder farmers and other “thin file” borrowers in developing countries.

New research from the Initiative for Smallholder Finance explores how innovative lenders are using new data sources and analytics to assess the creditworthiness of borrowers. From mobile phone usage data to e-wallet data, lenders are experimenting with a variety of approaches to unlock credit in underserved markets in the developing world.

While credit scoring models that use alternative data are still new in the agriculture sector, our research on several trends suggests that this market will soon be better served – thanks in part to the increasing penetration of smartphones and improved rural connectivity, both of which increase the availability of digital data.

Read the full briefing note to learn about these trends and understand how lenders can help adapt existing models to the particular needs of the agricultural sector.

About the Author(s)

Initiative for Smallholder Finance
Learning Lab Strategic Partner

ISF is an advisory group committed to transforming rural economies by delivering partnerships and investment structures that promote financial inclusion for rural enterprises and smallholder farmers. Combining industry-leading research with hands-on technical expertise, ISF develops practical, profitable, and sustainable financial solutions.