Harvard Students Launch “Smartphone as Collateral” Loan App in Nigeria.
Two students of Harvard University, Matt Tengtrakool, 19, and Hileamlak Yitayew, 20 are launching a microfinance-based loan app for quicker access to soft loans starting from Nigeria.
Both students are not Nigerian citizens, one being from Burlington, Mass., and the other from Bahir Dar, Ethiopia.
Matt Tengtrakool, and Hileamlak Yitayew, co-founded Oban Microfinance earlier this year to provide access to a microfinance firm with low-interest rates in emerging economies, starting with Nigeria.
The app is designed to allow users who initiate loan financing transactions to be assessed for the loan by using technology.
The app’s algorithm scans and evaluates the user’s smartphone camera quality, age, the screen’s brightness, and any other device’s statistic, popping out a value between $50, and $200 as the case may be.
The user would verify which value matches this evaluation and gets that amount approved as a line of credit which he draws from any Oban partner microfinance bank, the phone being the Collateral for the loan.
Tengtrakool spoke to a US business journal. He said:
“Currently, people are paying 15 percent to 40 percent interest on their loans. And now, because we can use their phones as collateral, they can pay 3 percent to 5 percent every month”
Matt Tengtrakool calls this “phone collateralized lending”.
He also said the end goal of the business venture is to make equitable and accessible microfinance possible across Africa.
Matt and Hileamlak are both roommates in school who have often worked on projects together. According to their story, they tried their hands at crypto and web3-related projects before settling on the African Fintech ecosystem, especially as Hileamlak is from Ethiopia.
On what their motivation was, Tengtrakool said, “The biggest financial issues we encountered were the predatory interest lending from the current microfinance market”.
But why Nigeria?
Tengtrakool said they discovered Nigeria has a huge microfinance market with a large population using smartphones.
To gain entry to the Nigerian market they hired a Nigerian lady, Ifeoluwa Aigbiniode, who is currently a fresh intake into Princeton University, US, and manages a team of 10 marketers in Nigeria.
Already, Oban has about 6,000 subscribers geared to run its pilot test for the beta launch on September 1.
Oban has also secured a $150,000 per $5 million valuation fund and has been part of Harvard Innovation Labs and Z Fellows.
Tengtrakool hopes to raise more funds through a seed round, which will aid Oban to take care of capital deployment, incorporation fees, and growing their team.
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