For years, Africa’s credit infrastructure lagged behind the rest of the world due to the poor credit coverage of its offices. According to a World Bank report, only 11% of the African population have their credit information collected by private credit bureaus. And of those who have a bank, only 17% have access to credit.
So there is a real need to record credit transactions. And as financial services in Africa continue to go digital, real-time access to credit will become increasingly important.
Africa’s credit bureau systems need to be overhauled to address these issues, but as this is a difficult question, infrastructure platforms that offer lending 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 Schäfer, will join the Indicina Board of Directors. Greycroft also participated in this round, as did RV Ventures.
As has been established, access to credit is an integral part of the uptake of financial services in each region. But while large corporations and wealthy individuals have no trouble accessing loans from banks in Nigeria, retail and SME segments are somewhat neglected.
That concern was too important for Yvonne Johnson to ignore while she was an executive at First Bank, one of Nigeria’s largest banks by assets. And as digital banking — which includes providing credit — gained momentum in the country, she told TechCrunch that she saw an opportunity to launch Indicina in 2019 to provide credit tracks and financial analysis tools for those businesses.
Lenders can use Indicina for credit scoring and bank sentiment analysis, gain access to ML-driven financial analytics and enhanced consumer insights they don’t currently have, and make unsecured lending less risky. Another interesting aspect 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’ve never had a record. It was never about 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 loan decisions so they can get their digital product to market faster. So we never had a business model that included our balance sheet, which we’ve always worked on with the lenders.”
Indicina’s unique approach to solving Africa’s credit problem is why Target Global and Greycroft invested in the company. According to their partners, Schaefer and Will Szcxzerbiak, both companies have supported Indicina because it uses data to solve the credit issue, previously decided by incomplete credit checks.
The fintech works with credit agencies and open finance platforms. Johnson, who launched Indicina with CTO Jacob Ayokunle and chief data scientist Carlos del Carpio, said the platform has over 120 customers including banks, non-banks 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 pay out 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 offering in the coming weeks to diversify offerings and revenue streams. While Indicina has already analyzed bank statements in real-time so lenders can make informed decisions, the bet is that consumers would also need this information. The easiest way to describe it is a credit and finance management platform like Credit Karma.
“We have worked with the lenders; Now we want to involve consumers. So you see what the lender would see if they applied for a loan,” Johnson, who is also an angel investor and has backed companies like Flutterwave, Eden and Thndr, said on the call.
This new funding, which is in place in Nigeria and Kenya, will spur Indicina’s expansion into other African markets. “It will also allow the company to strengthen its key product offerings, develop more products for consumer credit referrals and strengthen its infrastructure,” the company’s statement said.
Johnson emphasized the importance of using the funding to advance to the next iteration of Indicina’s machine learning and data game as part of the call. “It’s at the core of what we do,” said the founder, who runs the company with team members on 4 continents. The funding will allow Indicina to deepen product development in this space as it hires more data scientists and machine learning engineers.