Banks already have access to the financial transactional data that AdalFi’s proprietary technology scores.
The first significant corporate financing announcement in the South Asian nation this year as it struggles with a worsening economic crisis was made by Pakistani digital lending platform AdalFi on Thursday, when it announced that it had raised $7.5 million in funding.
According to a statement from AdalFi, the funding round was headed by COTU Ventures and Chimera Ventures of the United Arab Emirates, Pakistan’s Fatima Gobi Ventures and Zayn Capital, and “angel” investors such as executives from US-based financial technology and services provider Plaid.
Magnitt’s Emerging Venture Markets Report estimated Pakistani startups were only able to raise $315 million in 2022, down 5% from the record high of $333 million in 2021, as the nation’s financial woes have worsened.
Banks already have access to the financial transactional data that digital lending platform AdalFi’s proprietary technology scores. The B2B2C fintech then offers real-time loans and allows for personalised digital marketing to selected prospects.
Only 30% of Pakistani adults, who are largely unbanked and have limited access to credit, have access to formal banking services and mobile wallets, according to a survey by the non-profit Karandaaz.
“Only 5% of all deposit customers in Pakistani banks are also borrowers. “We therefore give banks access to this enormous, untapped customer base,” co-founder and CEO of AdalFi Salman Akhtar told the media.
Akhtar cited a State Bank study that found that consumers’ reliance on illegal credit markets was partly caused by the lengthy lead times for loan disbursements.
“Banks typically take two weeks to process a loan request without our platform.” Akhar claimed that fourteen financial institutions, including United Bank Limited (UBL), Habib Bank Limited (HBL), Meezan Bank, as well as other local banks and microfinance institutions, have joined AdalFi.
AdalFi has attracted banks because, according to him, we provide rigorous credit scoring to ensure portfolio quality. AdalFi makes money by receiving a portion of the money the bank makes from the loan. “The negative impact of non-performing loans is shared by us. The fees owed to AdalFi are prorated to account for loan losses.”