German micro-lender, MyBucks, has been hit by fraudulent loan applications barely three months after it began giving credit to small-businesses and persons in the informal sector.

The firm said it had so far prevented over 1,500 fraudulent loan applications and the registration of stolen identities using in-house artificial intelligence infrastructure and manpower.

Market entry

The micro lender began remitting loans in September after its entry in the local market in July this year after buying out Opportunity International, a micro lender and aid organisation, for Sh250 million. MyBucks currently has a network of 12 branches spread across Kenya.

“Our fraud detection engine has for the last three months already prevented more than 1,500 fraudulent loan applications and continues to inhibit the registration of stolen identities every day. Because our business model is digital, we do not have face-time with the client, we can remove emotional bias, and it forces us to analyse every bit of data we can obtain,” said MyBucks chief executive officer Dave van Niekerk.

“Since transactions are conducted solely online, we do not see the client and thus do not know who we are interacting with. We, therefore, need an advanced model that through capturing a lot of data can detect patterns almost like a finger print.”

The firm remits mobile-based loans to self-employed individuals in the formal sector in Kenya through the Haraka application.

The product, GetBucks Kenya, advances loans of between Sh507 (£4) and Sh5,077 (£40) at 12.67 per cent interest rate with re-payment due in six days.