Mark Schreiner and Hans Dellien
(2005) Microenterprise Development Review, Vol. 8, No. 2, pp. 1–5.
Latin American banks make consumer loans based on “high-tech” automated credit scoring, whereas microfinance lenders make microenterprise loans based on “high-touch” individualized analysis of cash flows and personal character. What can these two approaches learn from each other? In the next five years, downscaling banks will adopt a more personalized approach to collect data for scoring, and growing microlenders will add scoring as a complement to loan officers’ analysis. The increasing importance of scoring for all types of loans will create incentives for better credit bureaux.