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Instant phone loan system that levers customers off the couch

24 November 2016

Customers who run out of credit are of little use to mobile operators. That’s why two groups have signed with a service that allows them to offer selected customers top ups in advance. Alan Burkitt-Gray talks to Steve Polsky, CEO of Juvo

Read more: Juvo mobile money m-money Millicom Cable & Wireless Tigo CWC C&W credit scoring

Steve Polsky, Juvo
Steve Polsky: Juvo’s investors are a bunch of great
entrepreneurs, but the company has kept quiet while it
builds relationships with operators and customers





It’s Friday night on the couch. Millions of your prepay customers have run out of credit on their phones, which means they cannot text their friends to arrange to meet in the local bar. Which bar? What time? Who’s coming?

A social crisis for many mobile users, but it is lost revenue for operators (and bar owners, no doubt). The users may not be short of cash – just short of the means to top up their phone account. Back to the couch for a boring evening at home.

Or there may be a family emergency. No credit on the phone means no way to contact friends and relatives to pass on news or to summon help.

How about a loan? Better still, an electronic, over-the-air loan to enable customers to top up their phones – and then pay back the sum the next time they are passing a top-up centre.

After all, it’s not a lot, says Steve Polsky, CEO of Californian start-up Juvo. "Most top ups are small, $1.30 or so, sometimes only 40¢," he says.

The trouble is, mobile operators do not have the means to decide who’s creditworthy and who is not. Worse, in many countries they do not know the identity of many of their customers. All they need to do is get a SIM, top it up, and they are connected.

Who knows whether they are someone that can pay back $1.30 or even 40¢ come Monday morning?

And yet across the world, mobile operators are feverishly looking for ways to expand the range of services that they can sell to their customers. Financial services have been successful for Kenya’s Safaricom and other companies in Africa. In Europe, Orange has teamed up with a bank in Poland and has bought another bank in France.

Mobile payments in Africa are simple person-to-person transactions via SMS, though the range has been extended so people can pay bills. These work very well for prepay SIMs, which account for most of the market in Latin America and the Asia Pacific. But the person making the payment must have the money in their phone account. No cash, no payment.


Credit scoring system

Polsky has just gone public with the names of the first two operators that have signed up with Juvo for a credit scoring system for mobile financial services. Cable & Wireless Communications (C&W) and Millicom are both based in Latin America and the Caribbean, though Polsky hints that he is also talking to companies in other parts of the world.

"It is two and a half years since we set up Juvo," he says. "We have kept very quiet so far – we’ve been focusing on mobile operators and subscribers."

Behind the Juvo investment there is a stellar team of veteran wireless professionals: people such as Bill Esrey, former chairman and CEO of Sprint, Arun Sarin, former CEO of Vodafone, António Viana-Baptista, former chairman and CEO of Telefónica, and former AT&T Wireless president and CEO Mohan Gyani. "A bunch of great entrepreneurs," says Polsky about the investors behind Juvo.

Millicom has launched Juvo’s mobile identity scoring in six markets in South America, where the company operates under the Tigo brand: Bolivia, Colombia, El Salvador, Guatemala, Honduras and Paraguay.

The Swedish owned group, which also has mobile businesses in Africa, has put Juvo technology into its Tigo Shop app, which prepay customers can use to buy service packages and to manage their balance to activate additional voice, messaging and data, without paying more. Miguel Angel Garay, vice president of mobile for Millicom, notes that "prepaid subscriber behaviour is changing, driven by increased connectivity, digital services and smartphone adoption". 

This needs "an innovative digital strategy across multiple markets in Latin America", he adds.

"Juvo was uniquely positioned to help us transform our relationship with consumers at scale in a cost-efficient way. The company’s solutions to establish financial identities have helped us lay the foundation for a successful digital subscriber experience with a positive business impact."

Financial identities are at the heart of it. In cash-based economies, people do not have a financial identity: their mobile top up is often the biggest financial transaction they ever do.

"The idea is that we can do hundreds of millions of financial inclusions, starting with everyday interactions," says Polsky.

"We partner with mobile operators to re-imagine the way they work with consumers. And we can make individually targeted decisions. We get a holistic view of subscribers."

The Millicom partnership is "right at the very beginning of a true digital transformation journey", he says. "By demonstrating the scope and scale of our services through increasingly deep engagement, we have become a trusted partner. The next stage is to look at other areas where we can support Millicom in highly competitive markets, to open up even further access to advanced mobile services."

He clearly has a long-term view of how Juvo can develop the services it offers. Start by making an advance for the phone top up for voice, move on to data, "then you can provide mobile financial services" and other services. The first loans are intended for phone services, and Juvo aims to grow from there.

On his to-do list are items such as small business loans and insurance. "We bring a whole swath of people into basic financial services," says Polsky. "Everyone who has our service spends more money." Average revenue can go up 10-15%, he adds.


Flow Lend in 15 Caribbean markets

The second deal Juvo announced was with C&W, now part of the huge international cable group Liberty Global.

C&W has branded the Juvo-powered service as Flow Lend and has launched it in 15 Caribbean markets. It allows prepaid users to request credit extensions for immediate usage, dramatically improving customer experience and satisfaction, says C&W, which is offering credit extensions to 10% of the smartphone market in the Caribbean.

Flow Lend customers are, on average, consuming 10% more of the company’s products and services and are 50% more loyal, says C&W. It offers the service in Antigua and Barbuda, Barbados, Saint Lucia, Dominica, Anguilla, Cayman Islands, Grenada, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Turks and Caicos Islands, and the British Virgin Islands. It will soon be launched in Panama and the Bahamas, says C&W.

James McElvanna, vice president of products at C&W, says: "From user-acceptance testing, to in-market customisation and advanced data science methodologies, the overall experience has been very positive."

The company had concerns at first about some of the risks involved, including potential bad debt, but, says McElvanna, "identity scoring has helped to mitigate these risks and our 12-month goal of $1,000,000 in credit extensions was reached in less than four months, surpassing expectations."

According to Polsky, running out of credit means that many customers "don’t use their phones for four to six days a month". With the Juvo system, there is "zero interest, zero fees" and customers "pay back the exact amount they have borrowed". The benefit to the operators is that customers make calls that they wouldn’t otherwise have made. "The average loan is typically $1 to $20," he says. "It may be about avoiding Friday night on the couch, but it is much more about convenience. The average person who uses us does so five times a month." Juvo-funded calls can be 50% of consumption, he estimates.

Are Juvo loans secure, though – and how can they be, if operators do not know the identity of their prepay customers? "At first, we would not need to know your name," says Polsky. "But at the point of the cash loan, we will need to know that." Sometimes that will be done in association with a bank, he suggests.


Overcoming the high barrier to entry

Another challenge is that "a lot of financial services offerings are too esoteric." Getting people to sign up "is a high barrier to entry", he adds. "It is about meeting people where they are today. We want to make it immediate. We are focusing on high prepay, cash-based economies."

The two first contracts have both been in the Caribbean and Latin American region, where Juvo has needed to operate in just English and Spanish, but the company has also looked at south-east Asia. Moreover, there have been "positive calls" in eastern Europe and the US, he says. It’s probably no coincidence that eastern Europe has a high prepay rate and the US has millions of unbanked people who find it hard to get credit.

The company’s website lists Miami and Chicago as the sites of US offices, in addition to San Francisco; and there is also Buenos Aires, London, Manila, Jakarta and Hanoi. Those cities may be a clue as to the locations of future deals. "Mobile operators are in an amazing position. No one reaches more people than we do. We have a very solid revenue model."

And, since you are asking, what does "juvo" mean? It is Latin, the first person singular of "iuvare", which means "to help", or "to assist". So, helping people to get off their couches on a Friday night.













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