Payroll technology so workers have access to credit

ByRichard C. Sloan

Nov 3, 2021

It’s a fairly straightforward process to access consumer credit in developed regions like North America or Europe. Credit bureaus, banks and financial players easily interact and share information and data that credit providers can then use to make informed decisions.

On the African continent, however, it is a much more complex undertaking.

“Although there are credit bureaus and credit referral agencies [on the continent], the information is extremely limited. It’s often out of date, and frankly, it doesn’t and doesn’t match what’s really going on, ”Bento co-founder Chidozie Okonkwo said in an interview with PYMNTS, adding that“ the prepaid economy ” Africa makes searching difficult. data on consumers’ payment habits or determine their creditworthiness.

And that’s the challenge Bento is trying to tackle with its payroll technology, first by helping African businesses move from the mundane, manual process of payroll and human resources (HRM) management to digital and human-based solutions. in the cloud faster and more efficiently.

“Today, around 98% of African businesses use spreadsheets, checks [and] bank transfers to pay wages, ”Okonkwo said of the highly fragmented and inefficient process that its core payroll product, Pay by Bento, helps address by allowing businesses to pay wages, taxes, pensions and payroll. ‘make all statutory payments’ with just one click. . “

Leverage from a strategic perspective

Solving this first hurdle of automating the payroll process has placed Bento in a strategic position where it is connected to all banks, pension funds and tax systems, giving the business visibility and access to data on thousands of employees.

These employees, Okonkwo said, are “starving for credit solutions” to cover basic needs like rent and paying children’s school fees, and FinTech is using its point of view as a payroll solutions provider. to meet this need.

The company has also partnered with Tarya, one of Israel’s largest peer-to-peer (P2P) lending companies, to create a proprietary credit engine that pulls data from various third-party sources, enabling Bento to offer loans at more attractive rates than traditional retail lenders, as well as loans in minutes instead of days.

“When you take the payroll data that we have and some of the other things we do around machine learning with our partner in Israel, we are able to more accurately predict a person’s risk profile. and, consequently, to offer him loans at much better rates. “he explained.

Okonkwo said there is a need to educate the companies she works with and their employees about the importance of insurance, and the company is starting to make strides in this area as people grasp the ability to l ‘use as a tool to help improve their quality of life. .

He said Bento is able to offer loans at lower rates than its competitors, in part by bundling loan protection at a low price, which strengthens the willingness of lenders to offer lower rates. taking into account the guarantee provided by the insurance.

To date, Bento has processed over $ 40 million in salaries for more than 700 active Nigerian companies since its launch in 2019, and intends to expand to other parts of the continent.

He added that looking at the roughly 44 million small and medium-sized enterprises (SMEs) on the continent – according to data from the International Finance Corporation (IFC) – Bento and its combined competitors have yet to reach even 1% of market penetration, making the massive labor market a “blue ocean” bristling with growth opportunities.

“For us, it’s about solving that initial payroll problem, which is a major problem, and then we can leverage that to kind of unlock the much bigger pie,” he said.

Build an ecosystem

Beyond that, the payroll technology company will look to develop its other core human resource management solutions product, People by Bento, which includes a proprietary shift management solution that helps businesses monitor shift workers through facial recognition – “via wall-mounted tablets” – instead. in the traditional way of pointing or punching a card that can be played or manipulated.

He said he has seen a massive adoption of several quick-service restaurants, fast-turnaround consumer goods companies (FMCGs), warehouses and security companies, which use it to calculate the attendance and salaries of their employees.

Bento relies on key partnerships to operate in various verticals and, as Okonkwo said, “we are humble enough to realize that we will never be in the best position to offer actuarial tables for insurance or find the best way to manage a loan book.

He said it boils down to building an ecosystem “around employer and employee,” which allows partners to deploy their capital and expertise in a much more efficient and less fragmented manner.

In doing so, Bento will continue its expansion plans throughout the region, tailoring its solutions to different local markets. “We see a more global problem across the continent, and we believe that we are in the best position to solve it,” he said.

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