Dana: enabling credit access for the underbanked
Welcome to Shaper Impact Capital’s series of articles showcasing impact startups doing amazing things around the world. Here, we would be diving into Dana Fintech, a Bangladeshi fintech startup enabling banks and financial institutions to offer digital loans to MSMEs, gig workers, farmers, and underbanked populations.
In conversation with: Gazi Yar Mohammed, Co-founder and CEO of Dana Fintech
UNSDGs: #1: No Poverty / #5: Gender Equality / #8: Decent Work & Economic Growth / #9: Industry, Innovation & Infrastructure
Looking to fundraise: $1,000,000 (Seed)
The Problem: 90% of Bangladesh’s population is still credit invisible. Banks are unable to check the credit worthiness of underbanked customers with traditional methods, meaning that loans are out of reach for many SMEs and individuals. For those able to access loans, the process is slow: turn-around time for approval and disbursement varies from 20 to 45 days. At the same time, banks and NBFIs find it costly to source and process small loans.
The Solution: Dana is Bangladesh’s first home grown digital credit scoring engine driven embedded fintech for underbanked SMEs and individuals. Its digital credit scoring engine enables banks to score underbanked businesses and individuals in 5 minutes based on alternative data. The engine takes inputs such as customer transactions, mobile device SMS data, sales or employment data from distributors or employers, and financial test data. Based on the user’s dana credit score, our partner banks can offer digital loans within 30 minutes to 24 hours.
Catch a glimpse of the Dana user journey in this video.
The Market: The SME loan market size in Bangladesh is USD 75 billion and we aim to serve a small portion of the 8 million SMEs and 30 million informal sector workers who are traditionally unable to access bank loans.
The Team: CEO and co-founder Gazi Yar Mohammed has over 18 years of retail banking, cards and digital financial services (DFS) experience at multiple banks. Meanwhile, COO and fellow co-founder Zia Hassan Siddique has 10 years of retail banking experience with exposure to branch banking, project management and business finance. He also has 7+ years of experience in running software development and ITES company.
Recent Success: We have connected 4 financial partners (BRAC Bank, Prime Finance, CVC Finance, SIBL) and 3 network partners. We are now testing APIs with partners and would be live in October.
Recent Challenges:
- Getting the right tech team as there is resource shortage for fintech
- We cannot directly lend as a fintech startup, hence we have to depend on partner banks
Why we love Dana: We like their model of providing the middleware that connects underbanked individuals and SMEs to loans from traditional financial institutions. Such an approach provides scalability and stickiness. Dana is also headed by a team with deep understanding of and experience in the local market.
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