Indicina, a Lagos-based fintech startup, recently announced raising a $3 million seed round led by pan-European venture capital firm Target Global.
Participating in the round includes Greycroft and RV venture with Indicina’s partner Ricardo Schäefer to join its board.
The Shortcomings in Africa’s Credit Infrastructure
Africa’s credit infrastructure has lagged behind the rest of the world due to low credit coverage from its bureaus for years, with only 11% of its population having their credit information recorded by private credit bureaus, according to a World Bank report. And at this, only 17% of those who are banked have accessed loans.
As a result, there is a pressing need to record credit transactions. Accessing loans in real-time is becoming increasingly important as Africa’s financial services become more digitized.
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Africa’s credit bureau systems are due for a revamp to address these shortcomings, but because that’s a tall order, infrastructure platforms that supply credit underwriting processes are positioning themselves as viable alternatives in the market. One of such is Indicina.
It is a known fact that access to credit is an integral part of financial services’ adoption in any region. While large companies and high net worth individuals have no issues accessing loans from banks in Nigeria, retail and SME segments are somewhat neglected at scale. This drew the attention of Yvonne Johnson – while being an executive at First Bank, one of Nigeria’s largest banks by assets – to start Indicina in 2019 in providing credit rails and financial analytics tools for these businesses.
Changing The Narrative With Indicina
With Indicina, lenders can perform credit scoring and bank sentiment analysis, getting access to ML-driven financial analytics and improved insights into consumers they currently don’t have and derisk unsecured loans. Another intriguing aspect of Indicina’s solution is that manual loan processors can use the platform to double or triple their volume without bloating their loan books.
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“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,” said CEO Johnson, who launched Indicina with CTO Jacob Ayokunle and Chief Data Scientist Carlos del Carpio.
“We want lenders 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,” she added.
Target Global and Greycroft invested in Indicina because of its unique approach to solving Africa’s credit problem. Both firms sponsored Indicina because it uses data to solve the loan eligibility problem previously determined by incomplete creditworthiness assessments, according to its partners, Schäefer and Will Szczerbiak, respectively.
Credit bureaus and open finance platforms are among the fintech’s partners. According to Johnson, the platform has over 120 customers, including banks, non-bank lenders, and fintechs. Polaris Bank, LipaLater, VFD, Zilla, and CreditDirect are just a few. According to Indicina’s website, it has helped these clients process over ₦3 billion ($5 million) in loans from 10,000 bank statements and disbursed over ₦700 million ($1.17 million).
Facilitating B2C Credit Offering
Customers use API calls to analyze financial documents, which generate revenue for the company. To diversify its offerings and income streams, the company will launch a B2C offering in the coming weeks. Indicina is betting that consumers will also need this information. It has already analyzed bank statements in real-time for lenders to make informed decisions. Credit and financial management platforms, such as Credit Karma, are the easiest way to define it.
Johnson, who is also an angel investor, having backed the likes of Flutterwave, Eden, and Thndr, noted that “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.
Indicina is already present in Nigeria and Kenya, and this fresh funding will help the company expand into other African markets. The company’s announcement added, “It will also enable the company to reinforce its key product offerings, develop more products for consumer credit recommendation, and bolster its infrastructure.”
Johnson also emphasized the need of putting the funds toward the next iteration of Indicina’s machine learning and data play. “It’s the core of what we do,” she said. Indicina will be able to expand its product development in that area due to the funding, as it hires more data scientists and machine learning engineers.