New Member Spotlight: GFI Fintech

Thursday 25th February 2021

GFI Fintech joined the Financial Alliance for Women in 2020, after winning the Female Economy Bronze Fintech Awards in the first-ever Alliance Hack. As a rare women-led fintech in the big data space, GFI Fintech is paving the way for other women in the company’s home country of Malaysia and around the world. This week, we sat down with founder Dr. Haniza Yon, who is the former director of the National Research Institute in Malaysia, to discuss GFI’s credit scoring work with banks and her experience at the All-Stars Academy.

Alliance: For the benefit of our global readership, can you introduce us to GFI Fintech and the kind of services you provide?

Haniza Yon: GFI Fintech is a data tech company that specializes in profiling technologies for financial services companies. Our flagship product is called GFI, a psychometric credit-risk assessment system. Most of our clients are commercial banks, and they use GFI to complement their existing credit scoring for SME borrowers.

Our platform is very fast and simple – borrowers answer a 5-minute questionnaire about their preferences and personality traits related to entrepreneurship. We also look at their willingness to pay and ability to pay (based on past compliance), as well as their basic financial knowledge. This gives us a full picture of them even if they lack a formal a credit history.

Alliance: How do your services mitigate the main barriers women face in accessing basic financial services, and how can GFI Fintech contribute to closing the gender gap?

HY: Firstly, GFI is not specifically designed for the female MSME borrower. It is designed for the underbanked and unbanked market segment, but it does have features that are responsive to women’s needs.

In the Malaysian market, the main barriers that women face to accessing credit include: the informality of their businesses (many women are hawkers, “mom-preneurs,” or sell out of their homes); the absence of a formal credit history; lack of documentation such as financial records, utility bills, invoices, etc.; and lack of movable collateral. On the supply side, there is a lack of responsive and affordable financial products for women business owners in the micro, VSEs and SME segments.

By quantifying entrepreneurial competencies and positive financial behaviors, GFI enables these informal MSME entrepreneurs to bypass many of these barriers. Based on our current loan performance, GFI is consistently achieving a predictive accuracy of 90 percent. At one of our commercial bank clients, this has given them the confidence to use GFI exclusively (without other client data) to expand their suite of micro loans – including a woman-targeted loan product.

Alliance: Psychometric testing enables banks to reduce the underwriting costs of lending to women-owned/led MSMEs. Are you able to measure the real impact that your business has on banks?

HY: We see a difference in the key indicators we measure for our clients, and promise delivery on, including non-performing loans, market share of the previously unbanked segment, and time and cost of underwriting loans. We also measure the percentage of new borrowers that are women.

In terms of the impact on banks, we often hear from our clients that the processing time is very fast. And with faster turnaround, they have more approvals and are able to hit targets faster. In many instances, GFI is actually more predictive of loan repayments than the traditional model. This is partially because we do such close monitoring of borrowers and put extra pressure on ourselves to prove that the product works.

Alliance: Your company is B2B and targeted to financial service providers. While 100 percent of our members report working with fintechs, ironically, fintechs report disparities and challenges in connecting and establishing partnerships with banks. Has this been the case with GFI? What can be done to encourage more interaction between banks and fintechs to design solutions for women’s markets?

HY: It is a challenge as a startup fintech to get “in” with banks – it takes a lot of persistence and consistent delivery of a high-quality product to earn their trust. You must constantly nurture the relationship. It is tough to get buy-in, especially as a female entrepreneur in big tech – you may not always be taken as seriously. But by producing a good product and continually introducing new ways to enhance the product, you can build the trust.

There is also the challenge of getting people to change the way they’re used to doing things. If they have a certain process in place and that’s the norm, it takes a lot of convincing to get them to change it. But it depends on the product; if you are offering something they don’t have, that’s an easier sell than changing a system that they already have in place.

Alliance: What can be done to encourage more interaction between banks and fintechs to design solutions for women?

HY: First, there has to be more advocacy and quantitative data on the women’s economy to highlight the commercial and wider developmental impact of financially empowering women. In this regard, the substantive work that the Financial Alliance for Women is doing is highly relevant. Both banks and fintechs need to be educated first before they can effectively collaborate to address women’s financial inclusion. (I learned so much about this during the All-Stars Academy.)

Then, I would say, it’s very helpful to have an independent third party to facilitate the interaction between banks and fintechs. I am encouraged to see a number of hackathons and challenges fostering that interaction, and APIX [which hosted the Alliance Hack] is a good example of a collaborative platform linking banks with fintechs. A number of banks have also established innovation hubs to enable fintechs to co-create solutions with them. But these are seldom focused on advancing the women’s market.

Alliance: GFI Fintech won the Female Economy Bronze Fintech award at the Alliance Hack, our first ever hackathon. Why did you decide to participate, and what has been the impact on your business?

HY: Since our founding, we have focused our resources on perfecting our algorithm and business model, and so we have not given much attention to participating in competitions. We were attracted to the Alliance Hack because it embodied many of the values that we share. By this stage, we also had the track record to substantiate our value to the female economy.

One big impact we saw from winning the prize was the reputational benefits. The prize showed that we can go global, and it also helped us get more recognition at home. It was a morale booster for the team, as well. It helped us build our confidence, which is so important when pitching to clients.

So far, the most significant impact is that it validated GFI as a serious fintech player and has given us the confidence to know that our gender-responsive business model can be both commercially successful and socially impactful. When gender-responsiveness becomes more embedded into the product features, it will become a matter of scaling in order to multiply our impact.

Alliance: You are currently participating at our All-Stars Academy, which is being held online for the first time. How is your participation helping you refine your current business model and strategy?

HY: Participating in the All-Stars Academy has benefitted me and my team greatly. The materials and case studies provided in each module are just so rich. My whole team would watch during lunch, like a brown-bag lunch. And then we would have a discussion after about the content. I got a lot of ideas for how we can tailor GFI more for women and women-led SMEs. (As I mentioned, it wasn’t designed for women at first, but more generally for underbanked and unbanked people.) The All-Stars Academy also gave me the confidence to start asking banks about their women-focused products. And I now have a new business opportunity to share that knowledge with clients, which helps build trust.

For more information on AllianceHack 2021 watch this space.