Notto Uses Alternative Data to Expand Credit Access

In parts of Africa, building a house is rarely a six-month project. People build when they can afford to. They buy bricks one month, pour a slab the next, and stop for a year before returning to put up a roof. Dalumuzi Mhlanga grew up watching that happen in Zimbabwe. To him, the unfinished homes were not always a sign that people had no money. Many earned a regular income and managed their finances carefully. What they lacked was access to long-term credit. That observation eventually became Notto. Founded by Mhlanga, the company operates as a licensed alternative credit bureau. It says it has processed more than one billion transactions and generated over eight million credit scores across Africa using financial data that rarely appears in a conventional credit report. The idea started much closer to home. “It started with members of my own family who had been paying rent in full and on time for years,” Mhlanga says. “They were consistently meeting this very significant financial obligation, but they still could not access home loans.”

For him, the question was straightforward. If someone has spent years paying rent without missing a payment, why does that count for so little when they apply for a mortgage? The contrast became clearer when he arrived at Harvard University. Despite being a first-year student with little income, he regularly received credit card offers from American banks. “In Africa, you had people who had proved they could meet financial obligations, but the system couldn’t see them,” he says. “In the US, lenders were willing to look beyond where somebody’s bank account stood that day.”

The Product Wasn’t the Problem

Notto did not begin as a credit bureau. The company originally built a credit score for home loans. Two years later, the team realised they had focused on the wrong problem. The challenge wasn’t creating another credit score. It was finding reliable data. Rent payments, utility bills and mobile money transactions all reflected how people managed money, but that information sat in different systems and wasn’t available in a format banks could easily use. So the company changed direction. Instead of building lending products, Notto focused on building the infrastructure that could turn those records into credit information for financial institutions.

Banks Already Know the Opportunity Exists

Mhlanga doesn’t think lenders need convincing. His view is that banks move cautiously because changing the way they assess risk affects almost every part of the business. A new model has to pass through product teams, risk committees, compliance departments and technology teams before it reaches customers. Infrastructure projects also take time to produce results. “If you’re being measured every quarter, it’s difficult to prioritise something that may only deliver value a few years later,” he says. After analysing more than one billion transactions, Notto noticed another pattern. People borrowing from informal lenders were paying interest rates that formal banks would consider excessive, yet they continued repaying those loans.

To Mhlanga, that suggests many borrowers are not necessarily high risk. They’re simply difficult for traditional lenders to assess. Without better information, lenders often price loans for the average risk across their portfolio instead of the individual sitting in front of them. Notto’s models use transaction histories, recurring income, bill payments and other digital records to help lenders build a fuller picture of potential borrowers. The company also changed the way it gathered data. Notto’s first plan was to collect information directly from tenants and landlords. The process worked, but it wasn’t practical at scale.The company eventually shifted to partnering with organisations that already held transaction data, including fintech companies, payment providers and telecommunications firms. That allowed Notto to concentrate on analysing data rather than collecting it.

Trust Matters as Much as Technology

Using financial data inevitably raises questions about privacy. Mhlanga says operating as a licensed credit bureau means Notto must comply with data protection laws and consumer consent requirements in every market where it operates. He argues that regulation is part of building confidence in alternative credit data rather than something the industry should work around. Mhlanga believes traditional credit records will remain important, but they are no longer enough on their own. Millions of Africans already leave behind a financial record through rent payments, mobile money, utility accounts and digital transactions.