BfreeNigeria’s Credit Management FinTech, after raising $ 1.7 million in a pre-series A round, embarks on a global expansion to take advantage of opportunities in emerging markets where digital lending apps are booming recently. did.
Funds that participated in the latest round include 4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and other angel investors, with a total capital raised by Lagos-based startups of $ 2.5 million. We have achieved $ 800,000 in the seed round. May last year.
Bfree is currently conducting extensive recruitment activities in 16 new markets with operations, including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan and Indonesia. This is because it has grown beyond Nigeria and began operations in August 2020 before entering Kenya last July.
Julian Flosbach, co-founder and CEO of Bfree, told TechCrunch:
Bfree was founded by Chukwudi Enyi (COO), Moses Nmall (CPO) and Frosbach Following his direct experience working for digital lenders in Nigeria, the CEO sought to develop better, ethical and technology-inspired debt collection tools and processes.
“We found that there was a slight breach of the lender’s value proposition. The lender is good at providing loans, but the credit market after-sales service worked because the collection process was inefficient and not user-friendly. I didn’t, “said Frosbach.
Flosbach has adopted TechCrunch and Bfree has adopted ethical debt collection standards and is working closely with defaulters on bespoke payment options with the ultimate goal of increasing repayment rates and customer satisfaction. Said.
Ethical debt collection standards ensure the privacy of customer information during the process, consider flexible repayment options, delay charges and Shame of debt (Currently, like many digital lenders).
The startup currently works with 30 credit institutions, including digital lenders, microfinance institutions and banks. Startups use customer data provided by lenders to create user profiles for defaulters, execute data through algorithms, predict their behavior, and recommend optimal collection methods.
Depending on the customer’s risk profile, Bfree may use a self-service platform where borrowers use their phone numbers to set up new payment plans, follow-up of debt balances via automated communication (chatbox, callbot, or IVR technology), or Direct customers to one of the direct phone calls. .. Startups also run regular financial literacy campaigns.
Emerging markets have experienced a surge in digital lenders in recent years, providing credit to a population that is not well serviced by formal lenders. The credits offered are often immediate and unsecured. This is different from a loan from a formal banking institution (such as a bank) where the borrower must at least hold an account, perform regular account activities and maintain a minimum operating balance. Moreover, traditional lenders need some kind of collateral to ease them from losses whenever the borrower fails to repay.
Digital lenders take advantage of the credits coveted by those who have been locked out Due to official banking, the default rate is high (in mid-2020) Kenya’s digital loan default was 23%), This forces them to outsource the services of collection agencies that use debt-shameful tactics, such as calling borrower friends and relatives, among other technologies.
Bfree has followed up 1.2 million defaulters to date and currently has approximately 800,000 customers, most of them in Nigeria. Flosbach expects the startup to process 1.4 million profiles by the end of next month.
Bfree has secured the services of industry-leading professionals such as Konrad Pawlus, formerly CTO of SALE Smanago, and Yohan Theater, formerly working for investment management firm PIMCO, in preparation for the next stage of growth. Theater will take over the responsibility for data decision making and financial engineering. The duo will work to disrupt traditional finance by leveraging blockchain technology in the secondary bond market and will be part of a team that drives new businesses for startups.
“US or European lenders have the opportunity to sell a significant portion of their debt portfolio to third parties, which means they carry only part of the risk of the loans they issue in emerging markets. So this is usually not the case. Lenders have to bear all the credit risks themselves. The main reason for this difference is the rising transaction costs and contractual uncertainties, “the theater said. I am saying.
“The advent of DeFi (decentralized finance) is a breakthrough. Smart contracts can increase transaction reliability while reducing transaction costs. These are now being actively offered to lenders and borrowers. It’s part of the risk-sharing method that we have, “he said.
Nigerian ethical credit-recovery fintech Bfree secures $1.7M, expands to Asia, Europe, South America and across Africa – TechCrunch Source link Nigerian ethical credit-recovery fintech Bfree secures $1.7M, expands to Asia, Europe, South America and across Africa – TechCrunch
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