Image credit: EFL Global
Entrepreneurial Finance Lab, or EFL, is a global company that provides psychometric assessments for largely unbanked people who need access to credit. They partner with financial institutions across the world, concentrating in the high growth markets of the third world, to assist agencies in evaluating risk for offering credit to those without a credit rating or financial history.
The programs were originally developed to address information asymmetry at the Harvard Center for International Development. Research began in 2006, and in 2011 EFL won the G-20 SME Finance Challenge. After opening new markets in Africa and Asia, and partnering with FICO to open services in Russia, Turkey, and Mexico, EFL was a finalist in the prestigious Wall Street Journal Financial Inclusion Challenge in 2017.
EFL provides psychometric credit scoring assessments that are adapted to the local culture. The assessment, which can be completed on a tablet or laptop without accessing the internet, seeks to evaluate qualitative measures such as personal initiative, situational judgment, creativity, and business acumen. The assessment tool is designed to add to a financial institution’s existing underwriting tools and methods.
It can also be used at the point of sale, with instant credit decisions for consumers who want to make a purchase. Available in oral or audio form and with multiple languages, continual improvement seeks to allow instant engagement with the tool by consumers and financial institutions. It is optimized for tablets and PCs.
EFL reports that within the informal, unbanked world population, they have increased the serviceable market by 25%.
Agencies, financial institutions, and governments are all stakeholders in the efforts to open economic opportunity to underserved populations through access to credit and savings opportunities. Psychometric testing is one tool that can add to a financial institution’s assessment of individual credit worthiness for those with little history or access to formal financial institutions.
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