Even in places like Nigeria, artificial intelligence-driven tools and building robust self-service portals to allow consumers to pay debts, set up payment plans, and more are being used in debt collection. Bfree, a Nigerian tech startup, just announced it has raised $3 million to help fuel the expansion of its platform and to help attract more clients.
While the original objective was to work with lenders that originated most of their loans online, the company has pivoted to traditional brick-and-mortar banks, which are the source for 70% of Bfree’s revenue, the company’s chief executive said in a published report. The digital lenders were not generating enough accounts and business compared to the volume that the banks are providing, the CEO said.
Countries in Africa have been trying to implement new rules and regulations surrounding debt collection, by removing predatory tactics like incessant calling and debt shaming.
Bfree is considered to be Africa’s only tech-enabled debt collection platform. Most companies still rely on traditional call centers to make contact with consumers and work out payment arrangements. Sound familiar?
The company is planning on using the data it collects from its attempts to collect payments as a tool to help clients value the underlying assets, as a means of creating a secondary debt market where loans can be bought and sold.
“We collect so much data of borrowers, especially defaulting borrowers. We were able for the first time to actually develop an algorithm that can value these assets,” said Julian Flosbach, Bfree’s CEO. “We can predict how much is a loan that has not been paid back, let’s say for 90 days; how likely is it going to be paid back over the next one year. Then we go to banks and buy these assets and take them off their balance sheets, allowing them to offload the risk.”
