Why we invested: Indicina facilitates lending via digital credit infrastructure and credit underwriting services, in Nigeria

Authored by: Malika Anand
February 3, 2021 - 4 mins read
Indicina team

In Nigeria, credit bureau coverage is only 13.9%, meaning that almost 169 million Nigerians are at a disadvantage when soliciting formal financial services. Given this gap, fintech startup Indicina has developed a digital credit scoring technology that fundamentally restructures the credit value chain. 

Instead of waiting for the credit bureau infrastructure to take root and reach underserved populations, Indicina’s solution leverages data and tech to revolutionize how banks assess and disburse digital credit in one go. It provides banks with a proprietary credit scoring and management system that includes a web app for borrowers, a credit decision engine, as well as a platform to facilitate digital payments.     


Credit bureaus play a vital role in expanding access to formal financial services. Credit reports provide banks with information about the past behavior of applicants, thereby improving their ability to estimate repayment risk. With such improvements, banks can offer credit to those who might otherwise be excluded, as well as offer them more informed interest rates. Lower credit rationing and lower spreads for borrowers create both financial inclusion and inclusive growth. In fact, credit reporting is associated with higher economic growth and improves firms’ likelihood of accessing longer-term, lower interest credit

When such reports are not available, banks must rely on limited data available to them, often analyzed by hand, to assess an applicant’s creditworthiness. Such methods increase costs and risk, meaning that low-income households and small businesses struggle to access credit and must pay higher rates when they do so. When credit bureaus are introduced, fewer SMEs perceive financial constraints (rate drops from 49% to 27%), and leverage ratios are higher

Indicina’s solution radically transforms how banks approach thin-file applicants by providing a simple, data-driven way to assess their credit worthiness. This, together with the insights the solution provides, allows banks to increase lending for excluded users in a cost-effective manner, thereby ensuring that worthy individuals can access affordable credit.


To facilitate financial inclusion, countries can launch traditional credit bureau efforts like those in Brazil or construct an entire tech infrastructure as is the case with the India stack. Increasingly, when governments are slow or unable to act, or when financial ecosystems are too weak, banks and other financial service providers look to alternative data like social media usage, smart phone data, bill payments, mobile money transactions, and GPS data to craft innovative predictive models that can be used to assess repayment risk, much like a credit report. As the sources and quantity of alternative data increases (for example, via gig work data), so too does the power of alternative credit scoring. 

A number of fintech startups have harnessed alternative data to facilitate digital lending or to improve credit scores, but banks have struggled to incorporate these new approaches. The data is unstructured, distributed, vast, and dynamic; it is not easily incorporated into legacy bank operations and systems. However, growing competition from fintech startups has increased pressure for them to incorporate this data to enable better, faster credit decisions. 

Indicina’s API makes it easy for banks to incorporate alternative data by providing a straightforward solution that solves the problem end to end, from KYC to repayment modalities. To start, it connects with national identification databases to conduct KYC and other regulatory checks. It also provides an app to communicate with users and provide them timely information. 

The credit decision engine uses statistically-driven credit algorithms to combine demographic data, bureau data, financial transactions, and other sources of data to provide quick, reliable decisions. Finally, the API seamlessly integrates with existing banking systems, creating an entirely new way to offer financial services and even higher rates of performance. Not only does the solution help banks integrate new data sources, it does so in a way that improves overall lending. One Indicina customer found that applicants selected via the solution had a NPL ratio 16% points lower than those identified via a rules-based scorecard.  

Growth potential

Even as the vast majority of Nigerians remain excluded from credit bureau data and from formal financial services, the Central Bank has mandated a minimum proportion of consumer and SME loans. To deliver on this mandate in a timely and cost effective fashion, and to compete with fintechs, banks need to digitize their underwriting and disbursement processes. Although only three in ten Nigerians have a bank account, 151 million are now connected to the internet. They are accessing new digital channels and creating new and diverse types of data, which can be used to foster their formal financial inclusion using Indicina’s solution. 

Moreover, the embedded finance opportunity continues to grow as more and more businesses recognize the potential of financial services as a value add. With it, the potential market for credit decisions assisted by Indicina’s solution also grows. As retailers and services providers embed financial services into their product offerings, they will also need to integrate an interface and decision-king engine like that offered by Indicina. As such, the potential for growth is enormous. 



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