Indicina raises $3 million to help lenders make smarter credit decisions

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Published: 2022-06-10
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Yvonne Johnson is the co-founder as well as the Chief Executive Officer of Indicina. Image Obtained From: Indicina

When compared to people in other parts of the world, those living in Africa have a more difficult time gaining access to credit due to the limited coverage of credit bureaus that are intended to record their information. According to a survey published by the World Bank, only 11 percent of the population of Africa has had their credit information recorded by private credit agencies. This low coverage is not linked to the inaccessibility of credit, which has resulted lack only 17 percent of banked Africans accessing credit. [Citation needed]

The data of clients who use financial services are going through a process of digitalization at the same rate as these services are becoming more digitized. As a result, there is a greater demand for credit data in today's fast-paced fintech sector, where financial institutions that provide loan services strive to achieve the quickest possible time to market.

Earlier this week, Indicina, a platform located in Lagos that provides the infrastructure for this credit underwriting process, revealed that it had closed its seed round of funding with $3 million.

Target Global, a venture capital (VC) business based in Europe, is in charge of leading this round. Target Global's investments in Nigeria include Kuda, Kippa, and Edukoya. There was additional participation from Greycroft and RV ventures in this round.

Yvonne Johnson was able to notice the credit gap in Africa while she was managing the strategy team at First Bank of Nigeria (FBN) and working with hundreds of African businesses (banks and non-banks). As a result, she was encouraged to develop a solution to bridge the credit gap. In 2019, Johnson, who was also equipped with experience as a software engineer and as an investment banker at Merrill Lynch, founded Indicina with the intention of developing credit rails and financial analytics tools for the various businesses on the continent that had begun engaging in digital lending as a result of the increasing adoption of digital banking on the continent.

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Indicina was co-founded by Johnson, who serves as CEO, Jacob Ayokunle, who serves as chief technology officer, and Carlos del Carpio, who serves as chief data scientist. The three of them aimed to use machine learning-driven financial analytics to provide lenders with real-time credit scoring and bank statement analysis of prospective customers. This would help lenders acquire customers and prevent unpaid loans. Additionally, lenders are able to handle massive volumes of loans simultaneously through the use of automated processing thanks to Indicina's solution, all without recording significant default rates.

When providers of financial services, including banks, fintechs, and microfinance banks, embed Indicina's API-driven credit infrastructure into their digital product, it saves them the time and effort they would have spent building their own credit rail, making it simpler and more expedient for them to bring their product to market.

Johnson noted that this massive credit consumer credit gap persists despite the fact that there are banks that currently lend loans to giant corporate organizations. However, credit access is not extended to small and medium-sized businesses (SMEs), which Johnson referred to as "retail enterprises." This is due to the difficulty that banks confront when it comes to providing loans to retail businesses and small and medium-sized enterprises (SMEs). In order to avoid high default rates, banks are required to make the appropriate lending choice at scale.

We are involved on the infrastructure level. We're not a digital bank, we're not a digital lender. People are able to bring their digital financial products to market more quickly and with less difficulty when the infrastructure that supports them is improved through our involvement at the infrastructure level. According to Johnson, "what we've started with is the financial analytics layer, which helps to execute real-time credit underwriting for digital portfolios." And thus, "what we've started with is the financial analytics layer."

The backers of Indicina are convinced that it is plugging the appropriate loopholes. According to a statement that was received by TechCabal, Ricardo Schaefer claimed that the reason his company supported Indicina was because of its "objective to ensure that eligibility for loans would no longer be determined by incomplete creditworthiness assessments." In a similar vein, Will Szczerbiak, a partner at Greycroft, is of the opinion that the lack of access to credit in Africa is not due to a lack of creditworthiness but rather a lack of data. In the same statement, he noted that "Yvonne and her team are unlocking prospects by removing the complexity associated with accessing the data necessary to make underwriting choices."

"There will be the infrastructure at scale, in a manner that is easily accessible, such that every lender on the continent can plug into this infrastructure and is then able to open the doors to consumer lending," said Johnson, speaking on the ideal situation for Africa's credit infrastructure. Johnson was referring to the situation in which every lender on the continent is able to plug into this infrastructure and is then able to open the doors to consumer lending.

According to Johnson, Indicina presently caters to approximately 120 customers, which includes banks, non-bank lenders, and fintech companies. VFD, Zilla, Polaris Bank, and CreditDirect are just a few examples of these clients' companies. Indicina has reportedly assisted in the processing of 10,000 bank statements, assisted its customers in the processing of $3 billion, and disbursed $700 million in loans across two nations, as stated on the company's website.

The most recent finance secured by Indicina would enable the company to broaden its presence on the African continent beyond the countries of Nigeria and Kenya, where it presently has operations. Johnson highlighted that the issue that Indicina is addressing is one that affects the entire African continent. "There are credit bureaus that we work with on the continent. There are three big ones in Nigeria, and you can find them in other nations as well. However, coverage of credit bureaus is limited, with high single-digit coverage being the best-case scenario and low double-digit coverage being the norm. "Consumer credit gap is clearly not a problem that is unique to Nigeria; as a result, this is one that we are all working to solve across the continent," she stated in a teleconference with TechCabal.

Johnson has stated that the majority of its most recent funds will go toward the development of new products. It intends to improve the overall quality of its product by strengthening its machine learning products and expanding its data science team through the recruitment of additional machine learning engineers and data scientists. This will allow it to strengthen its machine learning products. "You want to ensure that you obtain those data as accurately as possible to continue to expand the product sets and value proposition," she emphasized to me. "You want to make sure that you get those analytics as quickly as possible."