How Periculum is helping lenders mitigate risk with its unified financial data platform

August 23, 2022
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Timothy Ojo

According to the world bank, one-fourth of the global population i.e., 1.7 billion people are currently unbanked with a majority of the population being a part of just five of these developing countries: Bangladesh, China, India, Mexico, Nigeria, and Pakistan.

The World Bank Group considers financial inclusion a key enabler to reducing extreme poverty and boosting shared prosperity. A major way to promote financial inclusion is access to credit facilities which reiterates the strong link between access to loans and strong economic growth in any country. An accessible credit industry increases the number of participants in the economy and fosters economic expansion.

With a $350 billion credit gap in Africa, financial institutions have come up with innovative ways to improve credit access across the continent. However, these efforts are being frustrated by the high rate of bad loans with the rate of non-performing loans going as high as 25% in some countries.

Per Al-Jazeera, 20% of Nigeria’s workforce lost their jobs due to the pandemic. Efina states that 80% of the nation’s workforce was affected by the pandemic. At the moment, Nigeria currently serves an unbanked population of 40 million people. Even the business owners aren't left out in the lack of access to credit as SMEs account for 90% of all businesses in Nigeria, but these businesses do not get adequate funding. Most entrepreneurs get funding from their savings or from friends and family.

With a nation filled with so much need, easy access to credit from lenders or financial institutions is a necessity. Sadly, this is not the case.

So what are the issues that currently plague lenders in credit assessment?

  • According to Verifyme’s report, over 100 million Nigerians do not have any form of identification. Without proper identification, lenders or financial institutions cannot effectively operate a proper credit system.
  • In a world that creates 2.5 quintillion bytes of data every day, financial institutions still struggle with getting accurate predictive data to make better credit decisions. It is not caused by the unavailability of data but by the inability to access it. However, Data is only useful when you can access and understand it.
  • Credit profiling is often done with information obtained from traditional financial data from a single account provided by the borrower, however, over-reliance on a single data source does not provide an accurate picture of the borrower’s financial health.

Nigeria’s active bank account increased by 14.41% from 97.485 million active accounts to 111.54 million, data from the Nigerian Inter-Bank Settlement System Plc (NIBSS) reveals. Total savings accounts increased by 13.8% from 114.13 million accounts recorded in April 2019 to 129.91million accounts in May 2020. Also, Current accounts increased by 3.59% from 24.3 million accounts to 25.17 million accounts.

Though this increase is a big boost to achieving the National Financial Inclusion Strategy (now revised) goal aimed at reducing the financial exclusion rate from the baseline figures of 46.3% in 2010 to 20% in 2020, it is worthy of note that 36.5 percent of the accounts were inactive with multiple accounts belonging to a single individual or business enterprise.

As a result of the existing fragmented financial data scattered across separate accounts, there is a need for lenders or financial institutions to get a unified or holistic source for financial data analysis.

It was on this premise we developed our Unified Data SDK.

What is the Unified Data SDK?

Our Unified Data SDK is a consolidated source for financial data analysis across multiple accounts. Using Data-Driven techniques, Unified Data SDK accesses all permission-granted financial data across multiple bank accounts, and segments & analyzes it to create a unified & predictive financial report.  

Our Unified Data SDK will provide an extensive understanding of prospective borrowers’ financial affairs by combing through all applicants’ mobile permissible financial data. Hence, totally identifying all their exposure to the different banks and other lending companies.

How does it work?

With our SDK integration installed into lenders' app, users' financial data can be collected with user permission, encrypted, and sent to the Insights analytics engine. Insights analytics engine identifies financial data, analyses it, and returns the results in real-time to the lender. Additionally, lenders will be able to get information such as location, phone type, and network type.

What are the benefits?

  • A broader and holistic view of borrowers’ creditworthiness: For segments of borrowers with multiple SMS alerts from different bank accounts, our Unified Data SDK will expose important variables from all of the accounts.
  • Wider Coverage: A significant number of people receive Bank Alerts & transaction notifications from other lenders on their mobile phones thereby easing the process of credit assessment. Also, credit providers can now extend their services to cater for a bracket of customers that do not rely on or have access to soft copy Bank statements to determine their creditworthiness.
  • Discover crucial insights hidden in your client’s financial data and its impact on their loan application.
  • Grow your business with ease & facilitate a significant improvement in your underwriting process.
  • Make better & informed lending decisions by mitigating credit risk in the loan application process
  • Review & analyze financial data from multiple sources in one place

At Periculum, we are committed to leveraging technology to bridge the credit gap & promote financial inclusion. With our Unified Data SDK, you can maximize the value of alternative financial data across various channels.

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