Banking on the ‘underbanked': CredoLab racks up US$1m in funding

Following a significantly oversubscribed Pre-Series A, CredoLab raised more than US$1million of funding to date.

According to a 2014 World Bank Global Findex report, there are 2 billion people in the world who remain underbanked. This huge chunk of financially excluded world population do not have access to basic financial services offered by mainstream institutions like banks, or mobile money service providers. Digital credit risk management firm Credolab aims to fill the void and provide financial inclusion to this underbanked population.

It provides highly predictive credit scoring solutions for consumer lenders based on mobile phone data, says CEO and CredoLab co-founder Peter Barcak. CredoLab utilizes its proprietary mobile application, CredoApp, to extract a unique digital footprint from a consumer’s mobile phone. These completely anonymized digital footprints are developed into highly predictive digital credit scorecards using proprietary technology and know-how. CredoLab is able to improve both the availability of credit to those with no or limited banking history, as well as allow a lender to reduce their cost of risk and increase their approval rate.

"For the underbanked populations of Asia’s emerging markets, such as Indonesia, the Philippines, Malaysia, Thailand, Vietnam and Myanmar, the access to a credit score without an existing credit or collateral history greatly expands their economic opportunities, by giving them access to funds from microfinance institutions and commercial lenders," he says.

They do not obtain any personal or sensitive data from the customer for their credit analysis. At a time when stakes are high on data privacy, this is sure to give customers peace of mind.

"Our solutions promote financial inclusion by enabling lenders to focus on previously unbanked populations with an extremely high degree of control over credit risk," he says.

Following a significantly oversubscribed Pre-Series A funding round, Credolab announced that it has raised more than US$1million to date, The company closed its most recent fundraising round after receiving overwhelming investor interest offering, in total, twice the amount of capital it originally sought to raise.

The funding round was led by regional FinTech venture capital firm Fintonia Group, with additional participation from a consortium of regional institutional investors including Indonesia’s Reliance Modal Ventura. As part of the funding round, Fintonia Group Chairman & CEO Adrian Chng has joined CredoLab’s Board of Directors. Chng co-founded CredoLab and was formerly the CEO of JobsDB, who led the well-known regional job portal into an A$1billion merger with JobStreet. CredoLab’s CoFounders Peter Barcak and Greg Krasnov possess immense financial expertise, having built one of the leading consumer banks in the CIS (Commonwealth of Independent States) from scratch and sold it for close to a net capital gain of US$100 million for the institution’s investors.

"Traditional credit scoring is severely out-dated and inadequate, forcing many to turn to informal money lending with excessive interest," he says.

On the flip side, financial institutions in these markets also stand to gain greater control over their lending decisions, Barcak explains, and vastly expand their pool of qualified borrowers with little or no credit history and reduce the risk of lending to this segment.

Credolab’s headquarters is located in Robinson Road, Singapore.