Unlike the rest of the world, Africa’s credit infrastructure has struggled over the years due to low credit from its bureaus. According to a World Bank report, only 11% of the continent’s population have their credit information recorded by private credit bureaus, while only 17% of the banked have accessed loans. However, startup Indicina which focuses on this space is poised to bridge this gap via its digital platform.
As a result, it’s become necessary to record credit transactions, and as financial services in the continent of Africa continue to get digitized, accessing credit in real-time eventually becomes increasingly important.
To address this concern, credit bureaus are due to revamp, but since it’s a hard task, platforms offering credit underwriting processes are positioning themselves as an option in the subject market, and the Lagos-based Indicina is one such platform.
Indicina is announcing its seed round of $3 million led by Target Global, which meant an addition to its long list of investments in Nigerian startups that include the likes of Kippa and Kuda. The round also witnessed the participation of Greycroft and RV Ventures.
Meanwhile, the genesis of the subject startup actually evolved from ‘Yvonne Johnson’s’ experience while working as an executive with First Bank. And as digital banking – which includes the provision of loans – began to take off in the country, the CEO saw the opportunity to start Indicina in 2019 in order to provide credit rails and financial analytics tools for these businesses, according to a source familiar with the matter.
Noting that, access to credit is an integral part of financial services’ adoption in any geography. Yet, only big corporates and high net worth individuals have no issue accessing loans from banks, while retail and SME segments are somewhat neglected at scale in the subject market. However, with startup Indicina, lenders can use the platform for credit scoring and bank sentiment analysis, getting access to ML-driven financial analytics and improved insights into consumers that are currently not theirs. Equally, with Indicina’s solution, lenders who process loan applications manually can use the platform to double or triple their volume without stretching their loan books.
The CEO ‘Yvonne Johnson’ who has investment banking experience from Merrill Lynch said: “We’ve never had any balance sheet. It’s never been about offering credit for us. We want to focus on the infrastructure layer and provide good infrastructure for people to feel more comfortable”.
“We want leaders to be better informed about the decisions around credit so they can go 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 the lenders”.
In the meantime, the company generates its revenue from API calls made by its customers when analyzing financial documents and intends to launch a B2C offering in the coming weeks in order to diversify offerings and revenue streams. With the platform analyzing the bank statements in real-time for lenders to make informed decisions, it’s equally betting that customers will in turn need this information.
“We have been working with the lenders; now we want to involve consumers. So they see what the lender would see if they are going to apply for a loan”, Johnson said.
Target Global and Greycroft made clear that Indicina’s unique approach to addressing Africa’s credit problem was the reason they invested in the company.
Indicina is present in Nigeria and Kenya and plans to expand into other African markets with the fresh fund. Stating that “It will also enable the company to reinforce its key product offerings, build more products for consumer credit recommendation, and bolster its infrastructure”.
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