It is believed that digital lending companies in Nigeria lose over 2 Billion Dollars to loan defaulters per annum. The digital lending industry faces an obvious problem: how to leverage available data to decide on creditworthy borrowers, thereby mitigating the risk of bad debts and increasing their profit.
CreditChek seeks to provide a solution to the problem of verifying creditworthy borrowers by assessing and verifying the creditworthiness of consumers in Africa. It uses pre-approved data received from bank statements, government, and other real-time financial sources to offer financial data verification services for retail businesses and other lending institutions.
This will enable these companies to avoid loan stacking through historical profiling and determine appropriate financing.
I spoke with co-founder, CEO, Kingsley Ibe and Lionel Orishane, CTO. They took me through the behind-the-scenes at CreditChek as well as the challenges involved and their plans for the future.
CreditChek: Origins and starting out
The idea for CrediChek was based on a personal experience.
Kingsley who has almost a decade of experience in the Nigerian tech space told me that in 2019 he had initially founded a company called MicroMonie which was later merged with a bigger fintech called AjoCard.
But even before his first startup was merged, Kingsley said that he realised a problem while running his business. There is a high number of bad debts owing to loan defaulters.
This Kingsley tells me is a big problem in the digital lending space as high default rate forces digital lending companies to give out loans at a high rate in a bid to hedge risks but this also affects them as high-interest rates cause low retention making it difficult to build a sustainable lending business.
The idea for CreditChek started in June 2021, at a social gathering where Kingsley shared the Idea with Lionel who is his brother-in-law (as their wives are sisters). Lionel is a cybersecurity expert who is very knowledgeable in Data privacy, policy and data protection with over a decade of experience in the industry.
Kingsley recalls sharing his observation having worked in two different lending companies. Seeing that they had both observed the same problems and possessed the required skills and experience, the duo set out to build a solution that will tackle the problems they observed in the digital lending space.
The business model
CreditChek first launched as a consumer business in December 2021 with the intention to solve the credit problems in Africa. They hoped to achieve this by helping to profile consumers and present them to lending companies that offer different types of loans.
Kingsley tells me that they realised it was a terrible business model after running it for a few weeks. According to him
The founders realised that the consumer model requires giving freebies to attract users even though there is no guarantee the user would continue using the product once the freebie is exhausted. They did the maths and realised continuing with the consumer solutions model wasn’t sustainable as their cost was too high. this led them to change their business model
“We pivoted and launched as a B2B Business in private Beta by April 2022 and onboarded five businesses which we believed would be patient with us through the iteration and testing process of our products”, Kingsley added.
CreditChek’s Solution
Simply put, the solution CreditChek provides is to help these digital loan companies easily assess & verify the creditworthiness of their customers in Africa through the various products they offer to these businesses.
Its products are: Credit insight- which gives easy access to historical credit data from different sources including credit bureaus to give insight into your customers’ credit status
Income insight- which grants digital loan companies, easy access to historical credit data from different sources including credit bureaus to give insight into customers’ credit status
Identity- which unearths the true identity of potential borrowers and their location in real-time
Radar- the products that make it possible for these lending companies to easily access other NUBAN bank accounts linked to a borrower’s mobile number or BVN to assess all account statuses.
These solutions offered by CreditChek help tackle fraud, and loan stacking by borrowers and can be used For Microfinance institutions, savings and credit cooperatives, e-commerce and retail. businesses and software engineers.
