Africa is a diverse blend of nations at different points in their fintech journey.
And whichever point a country is at, Creditinfo Group can help them, its director for global markets Burak Kilicoglu said.
A veteran of Experian, Bank of America, Discover Card, Transamerica, and Whirpool Financial Corporation, Kilicoglu has a quarter-century of credit risk management experience working with international clients in the US, Europe, Africa, and the Middle East.
Creditinfo Group has a presence across the continent, with operations in Morocco, Tanzania, and Kenya.
Kilicoglu said that providing credit information gives people access to finance through software solutions that analyze data and produce insights supporting innovative strategies, products, and services.
Creditinfo Group uses nontraditional data in unique ways
Much of that information is generated in unique ways. Kiricoglu said. Nontraditional data is relevant across
Africa as credit bureaus don’t have the historical depth their Western counterparts enjoy. But they have rich data sources like utility and telco data that can be combined with even basic telecommunications data to facilitate loans and payments.
“These transactions give you sufficient information to do the key assessment for an individual or an organization,” Kiricoglu said.
“When we’re talking about lending, you have two concepts – ability and stability. If you have sufficient transactional information, and if you have the traditional information, suddenly, you have very strong data that you can use to make predictions about the behavior of individuals or SMEs quite comfortably, in a statistical way.”
West Africa is only beginning its fintech journey
In a recent interview, Florence Capital CEO Poshak Agarwal spoke of how India leapfrogged past the PC generation and went straight to mobile.
Africa has seen similar growth, Kiricoglu said. Governments and businesses are using this phenomenon to help underserved groups. In Eastern Africa, many dynamic fintechs contribute to a vibrant ecosystem that provides a range of products and services.
For West Africa, the process is in its infancy.
“In certain countries in West Africa, this process is just blooming,” Kiricoglu said. “The telcos are just looking at the richness of the data. They’re trying to couple that with credit bureau information, and they’re starting to loan processes, but you’re talking about nano loans.”
That’s sufficient because he explained that the parties need to establish trust in the system. People are still learning how it works and what they need to do.
“For us, being in the middle of that one is quite exciting because you provide the data, but you provide the analysis behind it,” Kiricoglu added. “And there’s a new educational aspect to that one. Here’s what a credit score means to you. Here’s how you can improve your credit score. And this is why it’s important for you.”
The region brings challenges and opportunities
Creditinfo Group uses the successful method of short, two- to three-minute videos that explain basic financial concepts to audiences ranging from individuals to SMEs. Each message is catered to a specific target group and is combined with sessions held at its offices that explain basic credit concepts.
With many Africans living in remote areas, providing financial access is more challenging, Kiricoglu said. Creditinfo Group partners with some financial institutions and international groups like the International Finance Corporation. Creditinfo Group develops a portal that gathers information about different lenders that can offer loans, with the recipient choosing one.
The beauty of such solutions is that they do not need the latest internet technology to succeed, Kiricoglu said, while acknowledging that connectivity can be spotty in some parts of Africa. Fintechs address this by customizing solutions that can get the required information from dropdown menus and other basic methods that use less bandwidth.
“You don’t need the latest technology; older phones and weaker connections are okay,” Kiricoglu said. “It’s how you design the solution and how you need to understand the needs and the limitations and the opportunities of the special group that you’re interacting with. And you need to customize the solution according to their needs.”
Agents of change
Different groups are driving this change across Africa. The IFC or World Bank takes the lead by conducting research, identifying a focus area, and bringing governments and fintechs together in some areas.
In West Africa, governments are generating ideas and looking for partners among the many fintechs looking to make a difference. Some start with such basics as converting utility bills to PDFs (with customer consent) to begin producing the data lenders need to serve their clients.
“That elevates it to the point where you have the two concepts — ability and stability,” Kiricoglu said. “Once you have those two, the next step is the lending decision, and that is the pattern we’re seeing.”
He added that this happens in dynamic environments with blends of languages, cultures, and religions. Fintechs are serving specific niches in diverse backgrounds and are figuring out how to personalize their message to those most in need.
Opportunities abound as Africa reaches critical data mass
Expect another productivity bump shortly, Kiricoglu predicted.
Much of Africa will soon reach a critical data mass where artificial intelligence can provide even more advanced scoring, which will help more people participate in the economy. That will produce specific technologies that deliver KYC services, protect against indebtedness, and target predatory lenders.
“Within a year, we will have enough information to look at artificial intelligence and machine learning-based decisions, the type of predictive models that are self-learning, that is providing additional uplift against the traditional model,” Kiricoglu said.
We’re at the beginning of an exciting era, he said. In partnership with Creditinfo Group, governments, and international groups, African entrepreneurs marry traditional and nontraditional data and build interactive systems to address customer needs. Perhaps a borrower needs funds for an appliance but does not have a high enough credit score. They provide Creditinfo Group with utility bills and other positive payment information. Maybe it gets increased, which means more financial options.
“These are the score boosts you have in the US or the UK,” Kiricoglu said. “It’s right there basically for Africa. The fintechs are there, they’re very hungry, they’re very aggressively looking for opportunities, and they’re coming up with relevant solutions. So from that perspective, the acceleration in Africa has started, maybe not at the same level across Africa, but it is certainly picking up.
“Certain countries are looking at other countries. ‘Wow, how does it work over here? How can I do it over here?’ If there are any regulatory constraints, they go to the regulators, they go to the governments and say they would like to have that too.”
And when those governments are approached, they can look to Creditinfo Group for information on how regions evolve.
“That interaction is very important because at the end of the day, the governments, the regulatory bodies, are the ones that are influencing the market,” Kiricoglu concluded. “If they have the right relevant, timely information about what is happening in the marketplace, be it regular benchmarking assessments that you’re doing in the market, or specific monitoring processes, this gives valuable insight.
“If you can derive relevant insights out of that information, then it’s very likely that you will be making the right moves. Being that link between the data and the actions providing that insight is a very critical position to be at.”
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Tony Zerucha is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain exposition in Hong Kong.