July 11, 2023

How the Mother of All Financial Apps Was Built

Impact investing only contributes to entrepreneur success when combined with time, motivation, and commitment. Summing up years of international experience, multiplied by a personal mission, and adding a committed team, one startup founder took on impact investments, curated bank partnerships, and found technological prowess, to make a solution to financial access in Myanmar.

Jumping the first hurdle that her users’ face, Theta mortgaged her own apartment to get a credit line that would allow her to lead the digital finance revolution in Myanmar. Since access to finance and credit for locals and migrant workers is not an issue limited to her country, Theta Aye, Founder of Mother Finance, tapped into the Financial Solutions for Migrants program while tweaking her new loan product to be better suited for migrants at varying levels of education and work types.

Blog_Mother Finance_How the Mother of All Financial Apps Was BuiltHome-bound: A challenge and an opportunity

Going home after an extended period abroad can be more challenging than many realize. The reverse culture shock can be debilitating. Add to that the realization that it is one’s calling to correct the fact that only 7% of 55 million people in your country have access to formal credit institutions – even in 2021, access remained lower than the world average at 37% – and you could say that entering into a financial venture was ambitious for Theta.

This is the story of this startup founder who worked internationally for years before returning to her home in Myanmar. She decided to apply her experience working in the financial services sector abroad and the largest bank in Myanmar to a local social issue: loan access.

For this founder, a calling is a calling! Theta drew on the memory of her family situation: “27 years ago, when I received a scholarship to study abroad, my parents had to borrow money from their family friends to pay for my air ticket fare.”

Lack of formal banking access limits both financial and entrepreneurial growth. “Collateral requirements and long wait times for loan processing, usually three months or more, force individuals and small business owners to resort to informal channels where they get charged more than 30-50% monthly interest,” explains Theta.

To solve this, Mother Finance has integrated 16+ payment channels with banks and digital wallets to enable loan disbursements and repayments. “We are also looking for equity partners to strengthen our balance sheet.”

Usability for all: The democratic challenge

Steadfast in her decision to make credit accessible, affordable, and trustworthy, Theta took on the challenge of democratizing access to financial services.

“It took more iterations than I can remember to get the technology close to perfect (at least for Myanmar market)!” says Theta, because she needed to create AI-based technology that could disburse funds within 48 hours, assess the true credit risk of any borrower using alternative data collected from users’ phones (with their permission), and – crucially – make it user friendly.

Mother Finance, the mobile app, was launched in 2018. Once the team found product market fit, effectively all the population could access credit. Competitors did emerge, so what makes Mother Finance stand out?

“Credit scoring using alternative data from smartphones is not novel, but we use extensive local data to train our machine learning models to cater for country-specific nuances and behavioral patterns.” Theta’s team unites in-house developer teams together with outsourced technology expertise to reach the perfect combination of expertise and dedication to the social mission.

Results that speak for themselves

Since 2018 – in only five years – Mother Finance has touched the lives of more than 100,000 borrowers, from individuals to micro businesses. Through the app, people for whom traditional banking wasn’t designed or catering to, have received over US$7 Million in loan value.

Following this success, Mother Finance launched a new loan product targeting economic migrants from Myanmar who have gone overseas seeking employment opportunities in Southeast Asia. 

Most families have to either mortgage their land or house to borrow money to pay for employment agent fees – to send their children to work abroad, for example. Interest rates are high so their entire salary earned abroad is used to service loan interest and the individual cannot support their families sufficiently, save for retirement or invest their hard-earned money. 

“One family was able to swap a high-interest loan for an affordable loan from Mother Finance and were, therefore, able to open a mom-and-pop store. This would not have been possible without additional savings from their daughter’s overseas salary because of lowered interest repayments.”

Education in lieu of marketing spend

The possibilities are growing every day, since triple the number of borrowers supported are ready for Theta’s help: 300,000 users have already registered on Mother Finance. 

Mother Finance grew organically for the first two years. The company hardly had to market because it simply opened the market: being the first to underwrite digital loans in Myanmar means the grapevine spreads the word. 

While growth was not hard, that does not mean Theta’s team faced no hurdles. They had to prove to the country and bank regulators that digital lending is possible and survive past 2021, when many potential competitors pulled out after the military coup.

On the upside, the time and money saved on marketing could be redirected to educating users. Many people with low digital literacy need help using the mobile app, from downloading to filling in the digital loan application form. “We provide visual tools such as step-by-step guides and videos through our social media channels,” says Theta. “Facebook, TikTok, Telegram, and Viber are ways we can supplement the trouble-shooting our customer call center hotline provides to users.”

Unprecedented barriers to entry and survival

Few founders building a tech-driven business in a frontier market face the difficulties Mother Finance overcomes every day. Yes, technology talent is limited, or new hires might have limited professional experience in their roles — talent sourcing is a global problem. But the biggest risk to survival for Mother Finance is political

Theta’s team made it through Covid-19 and came out relatively unscathed thanks to its digital-only operations. Then the military coup happened. 

“Internet connection was cut off for a while and you can imagine how, like many other businesses, that halted operations. We had to dial back from growth to capital-preservation mode and the coup derailed or postponed a lot of our future plans.” 

Strong and future-facing startup founder

In 2023, however, Mother Finance is back on track, re-expanding full scale, and, unsurprisingly, credit demand has been extraordinary, affirms Theta, the startup’s founder. The biggest win for the team? They have kept NPLs down to zero due to immense data insights they picked up through the local political and global pandemic-provoked obstacles.

“We would like to be the first digital bank in Myanmar,” says Theta. “Our app will be the super app of all things financial.” Fighting spirit, immense expertise, and a little help from impact investors all added up to the mother of all financial stories.

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