For years, Africa’s credit infrastructure has lagged behind the rest of the world due to poor bureau credit coverage. According to a World Bank report, only 11% of the African population have their credit information recorded by private credit bureaus. And for those who are banked, only 17% had access to loans.
There is therefore a real need to record credit transactions. And as financial services in Africa continue to digitize, real-time access to credit is becoming increasingly important.
Credit bureau systems in Africa need to be revamped to address these issues, but since this is a difficult issue, infrastructure platforms that provide credit underwriting processes are positioning themselves as options in the market. Indicina, one such platform based in Lagos, Nigeria, announces its $3 million seed round.
Berlin-based pan-European venture capital firm Target Global led the round, adding to its long list of investments in Nigerian startups including Kuda, Kippa and Edukoya. The company’s partner, Ricardo Schäefer, will join Indicina’s board of directors. Greycroft also participated in this round, as did RV Ventures.
As established, access to credit is integral to the adoption of financial services in any region. But while large corporations and high net worth individuals have no problem accessing loans from banks in Nigeria, the retail and SME segments are somewhat neglected on a large scale.
This concern was too big for Yvonne Johnson to ignore while working as an executive at First Bank, one of Nigeria’s largest banks by assets. And as digital banking — which includes lending — began to take off in the country, she told TechCrunch she saw an opportunity to launch Indicina in 2019 to provide credit rails and banking tools. financial analysis to these companies.
So lenders can use Indicina for credit scoring and banking sentiment analysis, access ML-based financial analytics, and improve consumer insights they currently don’t have and reduce lending risk. not guaranteed. Another interesting angle of Indicina’s solution is that lenders who process loan applications manually can use the platform to double or triple their volume without blowing their loan books.
“We never had a balance sheet. There was never any question of offering credit for us. We want to focus on the infrastructure layer and provide good infrastructure to make people feel more comfortable,” said CEO Johnson, who has investment banking experience from Merrill Lynch.
“We want lenders to be better informed about credit decisions so they can get to market faster with their digital product. So we’ve never had a business model that included our balance sheet, which we’ve always worked with. with lenders.
Indicina’s unique approach to solving Africa’s credit problem is why Target Global and Greycroft invested in the company. According to the two companies – as their partners Schäefer and Will Szcxzerbiak said – they backed Indicina because it uses data to solve the problem of loan eligibility previously decided by incomplete credit scores.
Fintech partners with credit bureaus and open financial platforms. Johnson, who launched Indicina with CTO Jacob Ayokunle and chief data scientist Carlos del Carpio, said the platform has more than 120 customers, including banks, non-bank lenders and fintechs. Some include Polaris Bank, LipaLater, VFD, Zilla, and CreditDirect. According to information on Indicina’s website, it has helped this clientele process over ₦3 billion (~$5 million) in loans from 10,000 bank statements and disbursed over ₦700 million ( ~$1.17 million).
The company’s revenue comes from API calls made by its customers when analyzing financial documents. The company will launch a B2C offer in the coming weeks to diversify offers and sources of income. While Indicina has already analyzed bank statements in real time for lenders to make informed decisions, it’s a safe bet that consumers would also need this information. The easiest way to describe it is with a credit and financial management platform like Credit Karma.
“We worked with the lenders; now we want to involve consumers. So they see what the lender would see if they were going to apply for a loan,” said Johnson, who is also an angel investor, having backed Flutterwave, Eden and Thndr, on the call.
Picture credits: Index
Present in Nigeria and Kenya, this new financing will enable Indicina to begin expanding into other African markets. “It will also allow the company to strengthen its key product offerings, build more products for consumer credit referral, and strengthen its infrastructure,” the company’s statement said.
Johnson stressed the importance of using the funding to scale to the next iteration of Indicina’s machine learning and dataset during the call. “It’s the heart of what we do,” said the founder, who leads the company with team members on 4 continents. The funding will allow Indicina to deepen product development in this area by hiring more data scientists and machine learning engineers.