Pivoting isn’t just for startups, says Mike Kubzansky, who leads the Omidyar Network’s Intellectual Capital team.
“When we were founded 10 years ago, we focused on making early-stage, Series A and B investments in social impact enterprises," Kubzansky said. But the question of access to capital kept coming up, “so we pivoted, and began seeking ways to foster greater financial inclusion.”
When Omidyar, a founding GERN member, wanted to learn more about how digital technologies are disrupting the early-stage financing sector, it conducted an in-depth study.
The results are detailed in a recently released report, Big Data, Small Credit, and described in an article by 
Arjuna Costa, Anamitra Deb, and Kubzansky, that appears in the upcoming issue of innovations. GERN members were given an early preview in February, when Kubzansky led a member conference call.
“Around the world,” Kubzansky said, “many emerging-market consumers remain severely limited in their access to formal financial services, particularly unsecured credit.” For example, in India, more than 400 million people borrowed money in 2014 – but fewer than one in seven were approved for a formal loan. He spoke about how the experience of being “invisible” to formal lenders is prevalent among billions of “thin file” or “no file” consumers who live in emerging markets.
Technology is rapidly bringing these customers into focus. Citing more statistics from India, Kubzansky explained how well over 650 million adults – four out of every five – have a mobile phone in their pocket; in a few short years most of these will be smartphones. More than 240 million people have access to the Internet and social media. Seven in 10 users of mobile broadband smartphones regularly stream videos on their phones; six in 10 use social networks. And every time these individuals make a phone call, send a text, browse the Internet, engage social media networks, or top up their prepaid cards, they deepen the digital footprints they are leaving behind. It is these digital footprints, Kubzansky said, that are sparking a new kind of revolution in lending.
In the last few years, new innovative lenders have developed algorithms and other predictive technologies to gain insight about these potential customers from these footprints. They are leading a wave of new ways to assess consumer risk, determine the creditworthiness of previously “invisible” consumers, and consequently offer convenient, and often cheaper, loans to the previously underserved. Their prime offering, unsecured, short-term, consumer credit served at a dramatically lower cost than traditional loans, is a boon to entrepreneurs.
“New services that ride on digital infrastructure are reducing the costs associated with disruption," he said.
Omidyar’s topline findings suggest that new entrants in the sector will find that utilizing big data to develop credit scores creates economic opportunities by addressing emerging needs for: cash flow credit; quicker credit approval, increased geographic reach and coverage, and reduced cost.
“A mega-economic trend of the 21st Century is the rise of emerging markets,” Kubzansky said. Credit is the fuel entrepreneurs need to develop, test, iterate, and bring new solutions to global markets. Our pivot toward ventures that provide credit to those who are invisible to traditional lenders is aimed at allowing a great many others to pursue entrepreneurial ventures and, perhaps, to make pivots of their own toward a more promising future.
The conversation with Mike Kubzansky and his Omidyar Network colleagues is part of a series of monthly conference calls exclusively for Global Entrepreneurship Research Network members and guest speakers. These member calls foster education in the field of entrepreneurship research and are a way for members to network with leading experts.