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Why credit data products will define the future of ‘Global South’

July 26, 2023
3 Min Read

In recent years, countries of the ‘Global South’ have experienced significant economic growth and development. Access to credit plays a vital role in fueling economic expansion and empowering individuals and businesses. Credit infrastructure is an essential tool that can help bolster financial inclusivity, mitigate risks, and foster responsible lending and borrowing practices, making them crucial for the sustained development of this region.

These countries can take a cue from the advanced credit infrastructure that is in operation for more than a century in the United States. Equifax started operations in 1890s and has continued to develop consumer products that serve as a foundation of the country’s credit infrastructure. Equifax’s suite of direct-to-consumer products was recently streamlined with the launch of Equifax Core Credit, Equifax Credit Monitor and Equifax Complete – priced from free to paid.

Major parts of the development and launch of these products were led by Mr. Arun Velu. As an experienced developer of many products in the financial services industry, Mr. Velu embedded novel elements of consumer reach such as utility of value, ease of use, and dynamic scalability. These products are being used by millions of people in the United States.

Here are the concepts that were used in Mr. Velu’s products and those that are to be considered in developing a credit reporting ecosystem for the developing economies:

  1. Promoting Financial Inclusivity

A significant portion of the population in this region remains unbanked or underbanked, lacking access to formal financial services. Credit monitoring products can help overcome this challenge by facilitating financial inclusivity, opening doors to affordable credit options, and empowering people to participate in economic activities.

  1. Encouraging Responsible Lending and Borrowing

The issue of over-indebtedness and unsustainable borrowing is a significant concern. Credit infrastructure offers a solution by providing lenders with comprehensive credit data to make informed decisions, ensuring that healthy credit is extended to those who can manage debt responsibly.

  1. Strengthening Small and Medium-sized Enterprises (SMEs)

SMEs play a pivotal role in driving economic growth. Credit monitoring products can address the issue of limited access to finance by offering lenders greater insights into the creditworthiness of SMEs. As SMEs flourish, they contribute to poverty reduction and increased economic stability in the region.

  1. Attracting Foreign Investments

Credit monitoring products provide valuable data to assess the overall financial health of the country. By demonstrating a transparent credit ecosystem, these products can enhance investor confidence and attract much-needed FDI.

  1. Mitigating Fraud and Enhancing Cybersecurity

Credit monitoring products also aid in verifying the identity of applicants and detecting suspicious activities. By integrating robust cybersecurity measures, these products fortify the financial system, safeguarding both lenders and borrowers.

Conclusion

As the Global South continue their journey toward economic growth and development, credit monitoring products emerge as indispensable tools. By leveraging the power of data and technology, these innovative products have the potential to revolutionize the credit landscape in the region. Ultimately, their widespread use can empower individuals, stimulate entrepreneurship, attract investments, and pave the way for a prosperous and sustainable future for these nations.

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