What this Canadian FinTech is doing to build credit assessments in Africa

By Puja Sharma

This financial exclusion has significant outcomes for the real sector as lack of access to credit can be a disincentive to entrepreneurship, investment, and economic growth. Periculum has been launched in Nigeria to tackle the challenge of domestic credit to the underserved markets.

Periculum, a Canadian FinTech has been officially launched in Nigeria and is set to build credit assessment infrastructure for Africa. Periculum helps its banking and lending customers identify fraud risk, assess creditworthiness, and analyze existing DataAccess in the region.

Nigeria’s domestic credit market pales in comparison to similar countries of the same size. For context, credit to the private sector in Nigeria is about 12 percent of GDP, lower than South Africa’s 129% and Malaysia’s 134%. High ratios of credit to the private sector in these countries have helped to ramp up real sector growth, create innovative innovation possibilities for technology-enabled businesses, accelerate financial development, ensure the efficient functioning of the economy and guarantee the prosperity of the private sector.

The availability of domestic credit is a key requirement for consistent economic growth in developing countries. The vitality of financial services such as banking, savings, debt and equity financing, investment management, and point-of-sale lending is largely dependent on the maturity of its domestic credit industry.

This financial exclusion has significant outcomes for the real sector as lack of access to credit can be a disincentive to entrepreneurship, investment, and economic growth. Periculum has been launched in Nigeria to tackle the challenge of domestic credit to the underserved markets.

The Central Bank of Nigeria (CBN) and other development partners including the Bank of Industry (BoI), the Bank of Agriculture (BoA), among others have embarked on significant credit injections to support the critical sectors of the economy, but the paucity of credit assessment infrastructure ensures many potential borrowers are denied access to loans, and when they do, they can be charged as much as triple the base interest rate.

Focused on improving financial inclusion in emerging markets through automated credit assessment tools that close the consumer credit gap and help financial institutions provide credit facilities to the financially excluded while making smarter decisions, Michael Temitope Collins, Periculum’s founder and Chief Executive Officer, said: “Africa needs domestic credit to stimulate real economic growth. And this is not only bank-to-business credit; it can also be digital lending for short-term credit as well as ‘Buy Now, Pay Later’ schemes.”

“The absence of tech-enabled credit assessment infrastructure has limited the quality and quantity of lending and may be behind the risk premiums borrowers have to pay, and the harassment practised by predatory lenders in countries like Nigeria. Periculum will change that. It is a top provider of data analytics and credit assessment services targeted explicitly to underserved markets,” he added.

“The customers to reduce their lengthy loan application processing times and loan default rates and offer loans to the underbanked and unbanked consumers as well as micro, small and medium-scale enterprises. With reliable, tech-enabled, credit assessment services, financial institutions can increase lending to those that need credit.”

Founded in 2019, Periculum helps its banking and lending customers identify fraud risk, assess creditworthiness, and analyze existing data. Periculum offers real-time decision-making, analysis, and credit underwriting solutions to financial institutions including banks, non-banking financial companies, and fintech companies. By providing information on the financial worthiness of customers and automating the loan decision process, Periculum’s customers can gather and analyze borrower information and assign a credit score faster, with real outcomes on financial inclusion in Nigeria and other markets.

Periculum offers data aggregation APIs and platform solutions that aggregate data from partners including open banking APIs and the credit bureaus, to provide complete financial and data profiles of prospective borrowers and third-party entities. Some of its clients include Fundii, Lendaba, Sycamore, Golden Ox Partners, Vola Africa, and Venero.

On its product roadmap and current services, Collins added “We offer services that include Credit model development, SMS data aggregation and analysis, financial data analysis, and other data analytic solutions. We can help our customers with solutions such as fraud detection, insights for lenders based on customer segmentation and customer lifecycle value, insights to retailers and ATM operators, and several other benefits”.

The startup was accepted into Techstars in 2021 and is among the 2021 Techstars Montréal AI cohort, as well as the Founder Institutes’ Select Portfolio. In October 2021, Periculum raised a $620,000 pre-seed funding round to help it expand its team, improve product development and scale its operations in Nigeria and other markets. The company currently delivers services to customers in Canada and Nigeria and plans to expand to Ghana, Kenya, and Egypt before the end of 2022.

For many countries in Africa, there is still a financial divide. By tackling the credit assessment challenge, Periculum can build the financial infrastructure that helps in addressing the issue of access to financial services and improves development outcomes for millions of people, with better opportunities for businesses, financial institutions, and lenders.