In a groundbreaking move, Pokkit Score, a South African fintech startup, is challenging the conventional credit scoring system by enabling individuals to improve their credit scores using their savings. Founded in 2023, Pokkit aims to address the pressing issue of financial inclusion in a country where millions of low-income earners struggle to access credit.

In South Africa, building a good credit score has traditionally relied on borrowing money, often at exorbitant interest rates. This approach has proven ineffective for millions of people living below the upper-middle-income poverty line, as stated by the World Bank. The country's banking sector is dominated by five major banks, which together hold 77% of the market, yet about 7 million South Africans lack adequate access to credit, while 21 million have no credit access whatsoever, according to the TransUnion report.

Pokkit's innovative approach allows customers to purchase savings vouchers, ranging from $5.55 to $220.60, which are redeemable after a set period. These contributions are securely invested in the Allan Gray Money Market Fund (MMF), and customers receive 100% of the interest earned, currently at 8.16% per annum. By sharing customers' savings behavior with credit bureaus, Pokkit enables them to establish or improve their credit scores.

According to Pokkit's CEO, Johan Koornhof, "We believe that it is wrong that people first need to incur debt to get a credit score. By enabling savings to serve as a pathway to credit, unlike traditional methods, this system encourages financial discipline and avoids the potential pitfalls of high-interest debt." With Pokkit, customers can benefit from low monthly fees and a money-back guarantee if no improvement in their score is observed within a year.

The impact of Pokkit's approach is significant. As Koornhof notes, "The best number is that 100% of customers without credit scores get one within two to five months; 80% of customers with low credit scores start improving within 5 months of regular payments." Pokkit measures its success through the tangible financial empowerment of its users, providing a much-needed solution to South Africa's financial inclusion challenges.

Looking beyond South Africa, Pokkit has set its sights on expansion across the African continent, where credit scoring systems often fail to reflect the true financial behavior of consumers and credit bureaus operate dismally. The company has overcome the challenge of gaining the trust of individuals without access to credit by reliable reporting and efficient management of payments and payouts.

Technology plays a crucial role in Pokkit's operations, with its entire system housed on AWS, powering a sophisticated dashboard that handles registration, transactions, and reconciliations entirely online. The company collects personal data voluntarily for financial services, credit assessments, and personalized offers, ensuring compliance with POPIA (Protection of Personal Information Act) and other relevant laws.

In the long term, Pokkit envisions becoming a leading data aggregator, reporting alternative data – payments that are not being reported currently. As the fintech landscape continues to evolve, Pokkit's innovative approach is poised to make a significant impact on the lives of millions of people, promoting financial inclusion and discipline in South Africa and beyond.