Tala Business Model and SWOT Analysis – How Does Tala Make Money

Overview

Tala is a financial technology firm that provides financial services by instantly underwriting and delivering credit to its customers with little or no formal borrowing history.

Tala has provided more than $1B in loans to over 4 million customers from East Africa, Mexico, India, and the Philippines. Companies have benefitted from the Tala organization to kick start their businesses. It has also been a hope for the students to pay their school fees and bills. All in all, Tala claims to help people build more stable financial lives.

Company Profile

Here is a brief overview of Tala’s company profile.

Company NameTala
WebsiteTala.co
Founded2011
FounderShivani Siroya
Key PeopleShivani Siroya – Founder and CEO, Jen Loo – Chief Financial Officer, Jori Pearsall – Chief Product Officer, Anay Shah – VP of Country Growth, Kunal Kaul – Chief Risk and Strategy Officer, Lisa Fernandez – VP, Global Talent, and Americas People Business Partner, Punam Brahmbhatt – SVP, People and Programs
HeadquartersSanta Monica, CA, US
Company TypePrivate Company
Revenue$75 million (annual)
Key CompetitorsStripe, Hyperledger, Coinbase, Limelight Health, Watsi, Leapfin, Feedzai, ZestFinance, Pantera Capital, Alkanza

What is Tala? A Brief History

Tala is a private financial services company backed by numerous leading investors, including GGV Capital, RPS Ventures, Lowercase Capital, ThomVest Ventures, PayPal Ventures, and Revolution Growth. Tala has its headquarters in Santa Monica and offices in Nairobi, Bangalore, Manila, and Mexico City. It is a smartphone lending platform.

Tala was founded in 2011 by Shivani Siroya for offering instant credit scores to individuals in struggling markets such as those of Tanzania, Kenya, the Philippines, and India. Tala app also acts as a lender.

In April 2018, the app managed to raise $65 million in funds from

  • Female Founders Fund
  • Lowercase Capital
  • Revolution Capital
  • Others

The total funding of Tala has amassed over $105 million.

How Does Tala Work and What Does it Offer?

Here is a complete breakdown of how Tala works.

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How does Tala Work?

The company uses technology to lend loans to individuals who have smartphones.

In most cases, we see that companies provide loans to people as per their formal lending history through a bank. This does not form a step in the working of Tala. In fact, the firm skips this step and does not demand a formal history; instead, it considers the data from the smartphone, which is credible enough to lend you a loan.

Tala has its own loan application, and that is also the source of getting to know the customers. Since it is a technology-based firm, it uses technology to look at the customer’s data and determines whether they are eligible for the loan. The firm analyzes the good and bad patterns of borrowing behavior from the customer’s side to decide whether to give them a loan or not and, if yes, then how much of it should be given.

The company vows to keep the customers’ data safe and secure from all kinds of intrusions. The data belongs to the customers, and Tala promises never to share it with anyone.

To use the app, you have to follow the following steps.

  1. You first have to download the Tala app from Google PlayStore
  2. Now open the app and sign up for a PIN. This would ensure the security of your account
  3. Once you have set your PIN, the app will ask for permission to access your smartphone data. The purpose is to get to know you and analyze your borrowing behavior
  4. If the permissions are granted, you are eligible to apply for the loan. You would be asked some general questions like who you are, what you do for a living, and why you need the loan
  5. The amount of loan and date of return are determined by the customers. Tala specifies a fixed amount of service fee according to the amount of loan requested.
  6. There won’t be any additional fee surprises along the process and the entire time. You would know exactly how much you have to repay and where the process is going without any form of ambiguity.
  7. Now that you have decided the amount and time, your loan will be sent to your MPESA account
  8. Don’t uninstall the app because it will help you in planning your due date. You will also receive reminders and tips to keep you aware and help you manage your money
  9. If you have reached the time to return the amount, you can use the Tala Billpay number to make the transaction from your MPESA account
  10. If you are unable to return the loan by the due date, you will be charged a one-time extension fee, and your due date will be expanded for 14 days
  11. You can even access bigger loans with lesser fees by repaying your loan on time
  12. On-time payments correspond to the company’s growing trust on you, and this is how the company-customer relation grows stronger over time
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What Does Tala Offer?

While discussing Tala, Shivani Siroya talks about how the credit bureau covers only 30% of the adult population across the globe. The owner tells how the stats and figures made her feel for the individuals who remain unheard of and don’t even have their identity.

And this is how the idea of developing a startup crossed her mind. To this day, Tala serves as a platform and a source of hope for the people of struggling markets to get instant loans and improve their financial lives.

Tala grants loans between $10 and $500 to the mobile wallet. As we write, Tala has contributed to over $225 million microloans in the world.

Tala Business Model

The founder of Tala, Shivani Siroya, talks about the adult population of the world covered by credit bureau as she talks about the company. People from countries like Kenya, Tanzania, and the Philippines can now access instant credit scores just based on daily-life data from their smartphones. Tala charges a specific fee over the amount of loan requested by the customer.

Tala Unique Selling Proposition (USP)

The founder of Tala has previously worked for the UN Population Fund, where she got the opportunity to interview over 3,500 individuals from 9 different countries of West Africa and sub-Saharan Africa. This was the time when she held conversations with the hardworking individuals who were unable to access the loan. And thus, Tala is an app that specifically targets this population that lacks the financial identity in the world’s market places.

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The owner claims to have gotten the chance to walk in the shoes of the customers and thus fully understand the problems. We can safely say that you can trust Tala to understand your issues and provide you a helping hand.

How Does Tala Make Money?

This is how Tala charges the service fee. You will be offered a 30-day loan with a service fee of 7% to 19%. If the loan has a 21-day plan, the service fee will range from 5% to 14%.

Tala is the one making profits from the interest rates and the transactional fees

SWOT Analysis of Tala

Here we have thoroughly analyzed Tala on the basis of the strengths, weaknesses, opportunities, and threats of the company. The information has been collected from various credible sources, including the Forbes Women’s Summit, where they caught up with Siroya.

If you didn’t know earlier, we have got you covered. Strengths and weaknesses form the internal factors of the SWOT analysis, while threats and opportunities form the external factors.

Strengths

  • Tala has granted more than $225 million in microloans to date
  • Tala managed to raise the total funding of over $105 million from prominent investors
  • The firm holds a repayment rate of more than 90%
  • The company has some big names contributing to its funds, including PayPal, Data Collective, and Ribbit Capital
  • In 2019, Tala raised a sum of $110,000,000 series D round from DCVC Bio, GGV Capital, Lowercase Capital, RPS Ventures, Thomvest Ventures, Data Collective, IVP, Institutional Venture Partners, PayPal Ventures, and revolution Growth
  • Tala improved its employee count by 9% in 2020
  • Money loans in Tala are approved and funded quickly
  • Tala provides easy loan approval with much less hassle
  • Your formal credit history is not required and thus does not hold importance in Tala

Weaknesses

  • The money loans you get from Tala are for short-term use only. The loan limit is lesser than the traditional banks
  • You might find the interest rates higher than what you get on bank loans
  • Tala, like other online loan applications, have a brief payment course

Opportunities

  • Just in 2021, Tala has teamed up with Visa, Circle, and the Stellar Development Foundation for cryptocurrency solutions in emerging markets to the underbanked individuals

Threats

  • One of the biggest threats to nearly all online financial apps is cyber fraud. Traditional fraudsters can make their way to the app affecting the company financially as well as ruining its name
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