Creditclan pivots into Buy Now Pay Later to deepen consumer credit
With the Buy Now Pay Later (BNPL) model gaining momentum in the credit ecosystem across Africa, Creditclan, a credit infrastructure startup, has announced its entry into the BNPL space after a successful transition from credit software-as-a-service (SaaS) to the BNPL platform.
During this period, Creditclan focused on the overlooked alternative channels for consumer credit, by building very strong technology and data anchors required for ecosystems like schools, merchants, hospitals, etc, while partnering with financial institutions to offer pay later opportunities to consumers at their point of transaction.
“We create the channels to reach customers at their point of transaction using our cocktail of data points to reach quick credit decisions, similar to the tech we use in powering many of the loan apps in the ecosystem,” CEO and founder, Creditclan, Femi Bejide said.
Founded in 2018, Creditclan is a BNPL platform helping banks, merchants, schools, and other businesses offer pay later options to consumers across Africa, leveraging its understanding of the infrastructure play to provide a different BNPL angle.
In its BNPL approach, Creditclan adopts both the direct to market approach and the embedded finance play driven by a robust set of BNPL application programming interface (APIs). For the former, Creditclan offers a funding relationship with financial institutions, which are able to gain new customers at a low acquisition cost, in addition to a return on their balance sheet deployed at consumer’s point of transaction.
With the embedded play, financial institutions can plug in directly to their existing customer channels and start participating in the BNPL space, without having to do the grafting themselves.
“Consequently, Banks and other financial institutions can partner on funding directly through our channels or as an embedded API infrastructure through their preferred terminals, mobile, web or chat,” Bejide said.
With its credit-for-good initiative, Creditclan has been able to onboard over 4,000 schools to date, with a number that has grown by over 100 percent quarter on quarter. This rapid adoption of its school-now-pay-later vertical has been driven largely by focusing on parents profiled as underbanked or unbanked, with many parents even enabled to pay their children’s fees weekly.
Also, with about 7,500 merchants registered during the period for the asset finance play, and growing more than 50 percent MoM, emphasis has been to partner with the micro to small scale businesses looking to scale their transactions with credit, which accounts for over 80 percent of the businesses in Nigeria and across Africa.
Soji Okunuga, CTO and co-founder, says Creditclan’s advantage is its deep knowledge of credit from its SaaS days prior to its entry into BNPL, with over 100 retail lenders and financial institutions using either the lending management software, bank statement analysis, credibility engine, or collection service.
“We ethically dimension data from everywhere possible, especially alternative channels like social and psychometric tests, in addition to cash flow, identity and credit history analysis, which enable us to make decisions quickly within minutes even when there isn’t enough legacy data available for prospective consumers. Our funding partners can then build their eligibility preference from 250+ analysis points to reach a disbursement decision, all at the point of transaction,” Okunuga said.
Driven by an aggressive ground play, Creditclan believes it will easily reach 150,000 merchants by Q2, 2022 as many new businesses across multiple sectors begin to offer pay-later options for their customers, consistent with a blended 93 percent acquisition rate across channels.
During the same period the startup will have assembled 20,000 schools and, with the continued partnership with banks, Creditclan will look at other channels pay later can be extended to, like medicals, rent, insurance, starting with Nigeria and extended to other African countries.
“We have gone very stealth mode so far,it is time to really deliver the results that will drive further consumer credit adoption across the continent. We believe we are that startup that helps bridge the gap in this $2tr addressable market. We believe we have the tech, team and partnerships to do so,” Bejide said.