• Platform

Sustainable capital allocation at scale

12 April 2023

Asset management plays a critical role in matching the demand and supply of capital in digital financial services (DFS). However, in the markets that JUMO serves, a severe imbalance exists between the two. This is mostly due to the high cost of serving the unique needs of the African continent. Despite this, JUMO’s asset management capabilities have risen to the challenge. Jan Harder, our Head of Asset Management and Modelling, explains how we combine technology and thought leadership to optimise our capital allocation and realise the highest possible positive impact for the unbanked populations of Africa.

The evolution of asset management at JUMO

Asset Management at JUMO has come a long way from being a simple job completed by individuals as part of their portfolio management responsibilities. With the increasing complexity of multiple funding sources, including banks, hedge funds, inclusion funds, and high net worth individuals, the need for a more in-depth and advanced function became necessary.

JUMO’s asset management function was born out of the need to allocate portfolios and assets to a diverse set of funders with varying targets or mandates for performance, credit risk, financial inclusion, and lending volume. This makes the capital allocation process complex and non-linear.

The dual mandate of asset management

While it is crucial to ensure that funders receive the right risk/return mix, JUMO’s asset management also has to honour our core mission or massive transformative purpose of providing financial services to unbanked populations in emerging markets. This dual mandate requires the considered allocation of assets to investor funds, whether they are from traditional banks or alternative funders,  in order to maximise our reach to small businesses and people. Our ultimate goal is to reach as many customers as possible, while ensuring access to sustainable financial services.

The importance of accurate forecasting

Accurate forecasting of lending volume, performance, and available capital is essential to the long-term success of JUMO’s portfolios. Incorrect forecasting can result in a knock-on effect on the overall portfolio health, requiring constant rebalancing that can be costly in terms of performance and growth. Capital forecasting is essential for managing portfolios on a forward-looking basis, avoiding limitations in funding that can impact customer satisfaction and support structures, like call centre volumes. It’s a difficult balancing act. We need to ensure eligible customers receive loan offers, avoiding dissatisfaction and an unpleasant customer journey.

Performance forecasting ensures that each portfolio funder receives the desired risk-return mix, building successful partnerships.

Introducing Magneto – JUMO’s in-house capital allocation solution

To facilitate the complex process of asset allocation, JUMO has developed an in-house allocation solution called Magneto, which also supports our ESG investment product Vela, which we launched last year. Leveraging advanced technology and expertise, Vela enables flexible, reliable, and sustainable matching of assets and liabilities. With Magneto and Vela, JUMO has taken asset management to new heights, ensuring efficient capital allocation at scale and driving the mission of financial inclusion in Africa.

Capital forecasting & capital allocation
JUMO’s approach to capital Allocation for financial inclusion

In conclusion, asset management at JUMO is not just about matching the demand and supply of capital, but also about driving sustainable and efficient capital allocation at scale. Through accurate forecasting, advanced technology, and in-house solutions like Magneto and Vela, JUMO optimises asset management for all participants in the ecosystem, providing financial services to the unbanked population and building successful partnerships with funders. As JUMO continues to iterate and innovate in asset management, it remains at the forefront of technology and thought leadership, driving financial inclusion in Africa to new heights.

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