Credit bureaus relying on outdated third-party data are only getting a small piece of the puzzle, Georgina Merhom says.
User-permissioned data sources, that consumers provide with their permission, come from a variety of places.
In addition, user-permissioned data sources replace the self-reporting process, brokers trust between the institution and consumer and identifies opportunities that the bank would have otherwise overlooked, Merhom said.
Building a better credit bureau or finding new ways to verify data from people without a lot of credit is not a new concept.
“It costs banks $29 billion a year to process applications, and that’s not even including the money they pay credit bureaus,” Merhom said.
Bfree, a tech-enabled debt collection startup based in Nigeria, was founded to automate and introduce ethical debt recovery processes after its founders witnessed the use and adverse effects of aggressive retrieval techniques, such as incessant calling and debt-shaming, by predatory digital lenders.
It also launched a loan collection management SaaS dubbed Workflow, which targets companies with in-house collection teams or those that are not keen to outsource.
Bfree to create secondary market for loansIts current loan portfolio stands at over $400 million, out of which it has managed to collect 12.5%.
He added that they also have an analytics solution for banks to help them gain insights into secondary debt markets.
“We foresee the growing prominence of credit management and are confident that Bfree will spearhead the creation of a secondary market on the continent for distressed assets.
