[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]On Thursday, AdalFi, a provider of digital lending infrastructure, declared that it had raised $7.5 million in early funding. According to a news statement from the startup, COTU Ventures, Chimera Ventures, Fatima Gobi Ventures, and Zayn Capital together with angel investors led the investment round.
Pakistan is dealing with a worsening economic crisis, and this is the first significant business funding announcement since the year’s beginning. According to the press release, the company’s goal is to promote financial inclusion by giving individuals and small and medium-sized businesses access to financing.
In addition to providing customer journeys that are embedded within the bank’s digital presence to enable real-time loan disbursement, AdalFi scores the financial transactional data that banks already possess, enables personalised digital marketing to qualified prospects, and makes digital marketing possible.
AdalFi operates on a revenue-sharing model with banks that is asset-light and captures any downside risk exposure to banks. As a result, any loan losses are prorated in the fees owed to AdalFi. Since AdalFi only profits from loans that are actually repaid, these strong connections guarantee that banks and AdalFi are totally aligned, according to the press release.
In essence, we have improved bank underwriting models. Salman Akhtar, co-founder and CEO of the company, said, “We altered their mindset and convinced them to change their methodology. We not only reduced the cost of credit scoring and underwriting, and therefore the cost of credit.
At Pakistani banks, only 5% of depositors are also borrowers. We therefore give banks access to this enormous, untapped client base, Akhtar told Reuters. He cited a State Bank investigation that revealed that one reason why consumers turned to unofficial credit markets instead was the lengthy lead times for loan disbursements. “Banks normally take two weeks to process a loan request without our platform.”
According to a press statement, the firm, which was established in July 2021, has permitted a total of Rs1 billion in gross loan volume (GLV) through December and has expanded the GLV by 30% month over month for the past 19 months. With a default rate of less than 0.1 percent, over 70,000 loans have been given since the company’s founding. “AdalFi generated Rs390 million in lending in just January 2023 and is on course to surpass Rs1 billion during Q1 2023,” the company said.
The business has agreements with 14 banks, among them United Bank Limited (UBL), Habib Bank Limited (HBL), and Meezan Bank, as well as other domestic banks and microfinance institutions. The CEO said, “We look forward to continuing to create positive change in the sector, and our quick growth is a testament to the demand for such solutions in the lending area.”
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