iBUILD Tech Soothes Micro-lending, Micro-insurance Pains
By Simon Handley
Chief Science Officer, iBUILD Global, Inc.
iBUILD stimulates housing construction capacity to meet the pent-up global demand for affordable housing supply. An accessible, formal housing supply is simply non-existent for the majority of the world, leaving over 330 million households without adequate shelter. The iBUILD platform offers an elegant fintech solution that empowers an untapped workforce to transact in a secure, transparent environment, with customers, lenders, architects and suppliers linked together in a powerful hybrid value chain. iBUILD formalizes and demystifies the construction process so that large scale developers and financial institutions, as well as the informal masses are all able to track and manage their resources through an end-to-end solution for housing construction, transforming an unorganized marketplace into a vibrant transparent ecosystem.
Here we discuss two innovative and specific ways that iBUILD is revolutionizing construction in developing countries: micro-lending and micro-insurance. By harnessing carefully chosen data streams and advanced machine learning, we can both make money and materially improve people’s lives.
Micro-lenders in developing countries lack specific, granular information about their clients and so are forced to fall-back on generic information about them. For example, by analyzing cell phone location traces they can infer home and work addresses and hence socioeconomic status. Also, by analyzing SMS and call records they can analyze personal financial decisions (through, for example, M-Pesa) and they can also see, for just one example, how often a client calls their mother.
We believe that these approaches are both uninformative and unnecessarily intrusive. We are focusing deeply on one area, housing construction, where we have extensive and granular data across multiple markets and countries. This data fuels the underwriting process without needing intrusive access to personal data and derisks the resulting loans. We ensure end-2-end value chain transparency so that housing is built efficiently and is of high quality.
Furthermore, we believe it is incumbent upon us, as a socially responsible company, to focus on the disbursement of loans that encourage production, rather than consumption. By ensuring lending is used for construction activities, we are helping people build their houses and improve their lives.
We can reduce the risk of both defaults and late payments by using our proprietary data to carefully design payment schemes that work best for our customers. For example, micro-lenders typically require a fixed monthly interest payment that is not reflective of the customer’s current financial situation. We are different in that we control the end-to-end flow of money within the construction ecosystem. We are perfectly placed to provide flexible payment schemes that allow that person to pay off their loan while not needlessly putting them at risk of a default, or late payment, which is not in our best interest. For example, payments for a contractor’s loan could be indexed by their actual incoming payments that month. Similarly, for suppliers we know their sales history, and that of their nearby competitors, so we can structure a payment plan that takes into account their monthly sales fluctuations. For workers, we can analyze the patterns of their employment by contractors, the future demand for their particular skills, and forecasts of adverse weather events, so as to tailor a repayment scheme to their particular situation.
Micro-insurance is the provision of insurance to very low- income people that is targeted to their particular needs. iBUILD is in a unique position to provide the data that can be used to more accurately underwrite policies that are carefully targeted to the construction industry, in particular to contractors and workers. Because we control the end-to-end flow of money in this ecosystem, and due to our extensive financial integrations, we can easily receive premiums and make payments, even to the poorest of workers.
Insurance often requires onerous documentation both when applying for a policy and, more importantly, when requesting a claim. We can ease these requirements, as our platform automatically provides evidence that would help for example, in cases of breach of contract. In informal cash economies, the need to document insurance claims adequately, is a significant impediment to wider adoption of micro-insurance and this damping of growth exacerbates the shortage of affordable housing.
Our visibility into the entire construction process also puts us in a unique position to minimize fraud and hence reduce premiums. To give one example, workers on our platform clock-in and clock-out of work sites with geo-tagged photos so we can verify that a workplace accident really occurred on-site.
We believe we can be a force for good by encouraging workers and contractors to adopt safer work practices. For example, we could use our platform to show that appropriate safety gear was used, enabling cheaper premiums.
The iBUILD platform tracks the end-to-end flow of money through the construction ecosystem in developing countries. This puts us in a perfect position to provide financial instruments like loans and insurance to our customers at very affordable rates, even for the lowest-paid workers. iBUILD also has built-in promotions that allow workers to earn insurance premiums by consistently using the app for their jobsite payments. We deeply understand our customers’ construction activity and so can provide critical services to our customers at a lower price point than any of our competitors.