eBay Foundation will collaborate with IFC for the first time to help find data-driven solutions for financing small and medium enterprises (SMEs) in emerging markets.
The world’s digital data is expected to double every two years between now and 2020. In 5 years, 60 percent of the world's digital data will come from emerging markets. Currently millions of small businesses in emerging countries are restrained from growing, increasing revenue and creating jobs because of limited access to finance. This study will examine how this data can be mined to reduce costs to find and serve SME clients.
“Technology for analyzing digital data can be a game changer in enabling access to finance for individuals and businesses,” said Anita Bhatia, Director of Development Partner Relations. “This collaboration is about innovation and shared learning, and IFC is pleased to have eBay Foundation joining us to identify new approaches to enable greater economic inclusion.”
Banks often find it difficult to lend to small businesses due to the lack information about their creditworthiness. As a result, around half of small businesses worldwide do not have capital to either get off the ground or expand. Some lenders are starting to use alternative data sources like social media analytics, cell phone usage records, and data recorded from transactions to make lending decisions. SMEs increasingly leave a big digital footprint fueled by a sharp increase in the usage of mobile phones, online payment systems and social media. Lenders can tap into this large array of real-time digital data to gain valuable insights and extend finance to under-served businesses.
“We’re committed to using our strategic grant making to support and accelerate market-based approaches that enhance livelihood opportunities, reduce poverty and give people a better standard of living in the U.S. and emerging markets,” Amy Millington, President of eBay Foundation, said. “We believe the results of this study will be deeply informative as we continue to work toward this vision of full economic inclusion and participation.”
The study is being co-produced by IBM and the SME Finance Forum, an initiative owned by the G-20 and managed by IFC. Matthew Gamser, CEO of the SME Finance Forum, said, “There is a lot to learn from eBay. They have been a pioneer in using digital data to analyze customer behavior and move its business forward.”