LAS VEGAS • PayPal Holdings has made a strategic investment in Tala, a financial technology start-up that lends to underserved consumers in emerging markets, the companies said yesterday.

The companies declined to disclose the amount of the investment, but Tala said it will use the funding to further develop its product and broaden its reach.

Based in Santa Monica, California, Tala lends to individuals in Kenya, Tanzania, the Philippines and Mexico through its smartphone app. The firm has lent more than US$500 million (S$690 million) to customers and has over 300 employees around the world.

It is among a growing cohort of new entrants in finance that take advantage of digital technologies to service individuals who have been excluded by the traditional banking sector, because they are considered too risky or too unprofitable to serve.

More than two-thirds of adults across the world lack a formal credit bureau record, making it challenging for traditional financial firms to lend to them, the companies said.

To service these consumers, Tala analyses device and behavioural data to underwrite them and disburse loans of between US$10 and US$500 on mobile wallets or other methods. More than 85 per cent of customers receive a loan in less than 10 minutes.

PayPal and Tala said they shared a commitment to serving this consumer segment.

"We... are all very mission-aligned, both Tala and PayPal," Tala chief executive and founder Shivani Siroya said in an interview. "It's been clear through the due diligence process that we share the commitment to building the financial health of the underserved."

Since splitting from e-commerce platform eBay in 2015, PayPal has been seeking to transform itself into more than a payments processor. It has been expanding through a string of partnerships and acquisitions. Its suite of products includes remittances business Xoom, which it acquired in 2015.

REUTERS