Finclusion with Timothy Nuy | E251
Solving the banking challenges in Africa.
Today on the show we have Timothy Nuy, Founder and Co-CEO of Finclusion. The company is an African based neobank that is basically tackling a lot of the structural issues in banking in Africa in a digital way. With Finclusion Timothy is trying to build neobank for Africans that offers basic financial services starting with credit because they think credit is the hardest thing to get and yet the most needed in the current ecosystem.
Episode Highlights
1.11: Today our lending products predominantly are either employed or merchant distributors ranging from earned wage access to payroll loans and from buy now pay later to merchant lending facilities, says Timothy.
2.06: Timothy explains how he predominantly distinguish clients with our AI based credit scoring where they have consistently outperformed the markets from a collections and repayment perspective on the back of our scoring models.
3.07: Timothy saw in the DC African Development Corporation business that there is a massive gap in SME and retail credit and there are consistently high margins that allow you to profitably scale this business unit are often overlooked by traditional banks.
3.55: We started off building the tech and really came up with alternative ways of scoring, looking at transactional data better, but also making sure user journeys were as efficient as possible and back-end processing tech was built efficiently, says Timothy.
5.14: The traditional data is oftentimes not available on our type of supply and field. Also, the easily accessible credit score, simple repayment behavior isn't available. What is available is a whole lot of different data points that by themselves aren't actually predictable, says Timothy.
9.03: Timothy explains how does the business side of the business differ from the personal credit scoring?
11.10: Pledging security it depends on the market. In some markets it works, many other markets it doesn't. But depending on the relationship we can take a risk.
13.01: One of the benefits of building some of the infrastructure in Africa from scratch is that infrastructure gets built based on modern day design principles.
14.17: Buy now pay later has been something that has largely been a newer innovation in the Fintech space and within the last 24 months it's really taken off, says Jason.
15.02: Today we can offer credit better than anyone else, but that's a leap. IT doesn't mean we'll always be better than anyone else, says Timothy.
16.01: We basically unconverted ownership of a client into our world and really achieve long term client stickiness, says Timothy.
17.07: Timothy would love for the African rails to work as well as they do in India where you could just digitally verify anyone's identity and get access to their data in a readily simple, straightforward way.
17.51: Getting people brought into the company culture and building together, creating that feeling of togetherness without actually being able to be together in the same office has probably been the hardest thing to do, says Timothy.
19.20: Africa has been in the loss from probably the last 30 years. But Timothy truly believes it is going to convert and end up in the same space as a Brazil or China or India.
3 Key Points
Timothy talks about the core problem that has to do with the AI based models on credit scoring you deal with in Africa compared to more developed nations like the US and UK.
Timothy’s company does future wage access where they give you a loan which you can repay over 12 to 24 months using about 30% of your income as a maximum installment.
The reality of not being able to pay for goods and services at checkout is a much bigger problem in the African population than the rest of the world.
Tweetable Quotes
“We have a partner for distribution strategy because we believe that gives us the access to captive audience and addresses distribution challenge in Africa using networks that partners have already created.” – Timothy
“I feel there is no one really addressing the credit gap effectively with products and solutions that truly address the market needs on the ground and we could make a real difference.” -Timothy
“Very often tech is built optimally for users or customers, but it's not effectively built for staff members and internal users which are equally important in the long turnaround time.” – Timothy
“We can't afford to spend too much money on a single loan. So, it's incredibly important that most of the loan processing is done automatically without incurring marginal costs, because there's no basis for marginal costs.” – Timothy
“We work with any employer more than 200 employees, but we prefer to work with larger employers.” – Timothy
“No one would ask you for your house title for a small loan in the rest of the world probably via emerging markets where there's still an opportunity.” - Timothy
Resources Mentioned
Facebook – Jason Pereira's Facebook
LinkedIn – Jason Pereira's LinkedIn
Woodgate.com – Sponsor
LinkedIn – Jason Pereira's LinkedIn
https://www.linkedin.com/in/timothynuy/
https://www.finclusiongroup.com/
Podcast Editing