AdalFi, a digital lending platform in Pakistan, announced on Thursday that it has raised $7.5 million in capital, the first big corporate finance announcement in the South Asian nation this year amid a worsening economic crisis.
AdalFi claimed in a statement that the investment round was headed by UAE-based COTU Ventures and Chimera Ventures, Pakistan-based Fatima Gobi Ventures and Zayn Capital, and “angel” investors including executives from US-based financial technology and services provider Plaid.
It is anticipated that Pakistani entrepreneurs were only able to raise $315 million in 2022, a 5% decrease from 2021’s record high of $333 million.
The patented algorithm of AdalFi scores the financial transactional data that institutions already possess.
The B2B2C fintech then enables personalised digital marketing to qualified leads and offers loans in real time.
According to a poll conducted by the non-profit organisation Karandaaz, barely 30 percent of adult Pakistanis have access to conventional banking services and mobile wallets, making the country mainly unbanked with restricted access to credit.
“On the whole, barely 5% of deposit customers in Pakistani banks are also borrowers. According to Salman Akhtar, co-founder and CEO of AdalFi, “we enable banks to access this vast, untapped customer base.”
According to a survey conducted by the State Bank, consumers’ preference for informal credit markets is influenced in part by lengthy loan disbursement waiting periods.
Without our platform, banks usually require two weeks to execute a loan application. Akhar stated that fourteen financial institutions in Pakistan have joined AdalFi, including United Bank Limited (UBL), Habib Bank Limited (HBL), and Meezan Bank, in addition to other banks and microfinance institutions functioning in the nation.
“Banks have joined AdalFi because we offer rigorous credit scoring to ensure the quality of their portfolios,” he explains. AdalFi generates revenue through a part of the bank’s loan-related income.
“We share the risk associated with nonperforming loans. Loan losses are proportionally reflected in the fees owed to AdalFi.”