Nigerian fintech startup Aella Credit has been the subject of a large amount of financial and institutional support as it looks to increase access to finance through its proprietary algorithm.
The startup was launched in July of last year after the co-founders saw the need for an easy-to-use online lending platform in Nigeria. And its impact has proven attractive, with Aella Credit raising US$7.2 million in equity and debt financing in 2015. It also took part in the Barclays Tech Lab Africa incubation programme in Cape Town.
Aella Credit is a personal lender, underwriting loans with a proprietary algorithm focused on the Nigerian market and integrated with credit bureaus. The algorithm, which was built after the team gathered over five years of market data and analysis, processes an applicant’s eligibility for a loan by considering social and demographic factors as well as their debt to income ratio.
“Basically, creditworthy individuals should find it easier to access loans on the platform,” director Akin Jones told Disrupt Africa.
He said the founders had noticed the Nigerian financial services space had weak risk management systems, a lack of technological innovation and a broken process that did not benefit customers.
“The average time for loan processing from larger banks and microfinance banks was about three weeks. Excessive pricing by loan sharks in the market also deterred borrowing,” Jones said.
Around 90 per cent of Nigerians have never taken a loan, with Aella Credit’s goal being to ensure individuals are as creditworthy as businesses.
It has proven successful. The startup, with limited resources and only an online platform, disbursed loans to over 1,000 people in its first six months, seeing only four defaults. Over NGN100 million (US$500,000) has been borrowed via the platform so far.
The startup only currently operates in Nigeria, but Jones said it had plans to expand across Africa by 2018 with different platforms and applications. Aella Credit also has plans to expand the reach to the bottom of the pyramid and open a credit marketplace in the second quarter of 2016.
Revenues come from flat interest charges, while the company will also charge facilitation fees on its marketplace. Jones said Aella has made more than US$120,000 since its launch, and was projected to break even by the end of 2016, which he said would be a “remarkable feat” given macro-economic conditions in Nigeria.
He said the team had gained much from taking part in the Barclays programme in Cape Town, including technological and strategic knowledge. He believes the bank is looking for easier, more cost effective ways of gathering market knowledge and adapting to a new generation of tech savvy African customers.