Global credit infrastructure company Tala is using mobile, behavioral, and payment data to assess Filipino borrowers who may not have the documents, collateral, or credit records required by traditional banks.
The approach could help more nano and microentrepreneurs obtain working capital. About 27% of Tala’s customers are nanoentrepreneurs, including sari-sari store owners who use credit to restock products.
“Cash flow-based data and payment data haven’t gone away; they are incredibly important. But paired with behavioral data, device data, and telco data, we are in a unique position to target those nano-level entrepreneurs more so than existing financial institutions,” said Moritz Gastl, president and general manager, Tala Philippines.
Tala combines behavioral, external, and telecommunications data with its own models to make lending decisions in real time. Since its launch, the company has built underwriting records covering more than 50 million applicants.
These records include people who were approved and declined across different markets and risk profiles. This allows Tala to identify signs of a borrower’s ability and willingness to repay that may not appear in a traditional credit score.
The company uses this information through Tala InSight, its risk assessment system that evaluates customers beyond a fixed credit score and adjusts loan terms based on their circumstances.
Tala said nine out of 10 borrowers who used its credit for business reported an improved outlook, including greater stability, expansion, and confidence.
However, the company said wider access to digital loans must come with stronger consumer protection. It is calling for lending rules that consider the risks, costs, and business models of different financial institutions without blocking responsible services for underserved borrowers.
“Tala actively supports reforms and new regulations that solve consumers’ top problems,” Gastl said. “For example, to address unfair collection practices, we advocate for accreditation of debt collection agencies and publication of true, transparent information on financial products through our Debt with Dignity campaign. We recognize that pairing these structural changes with digital and financial literacy would strengthen responsible, sustainable economic participation and ultimately, drive capital market growth and innovation in the Philippines.”
Tala’s Debt with Dignity campaign promotes fair treatment during the entire borrowing process, including collections. It also calls for clear information about loan costs and greater flexibility when customers face repayment problems.
“What we’ve realized for the last 10 years is that most customers typically have a willingness to pay back. It’s really about providing flexibility and the right tools and, of course, treating them with dignity, treating them fairly,” Gastl said.