Hitting two birds with one stone – a phrase commonly heard when it comes to efficiency, and extremely fitting when describing credolab‘s, the behaviour risk scoring solution provider, service. Not only is the platform helping organisation’s with risk management, it is also looking to improve financial inclusion.
To discuss how the company is doing this, The Fintech Times sat down with Peter Barcak, CEO and founder of credolab. After over 20 years in senior roles at multi-national banks and startups, Barcak is an experienced leader. He has had a tangible impact on industries dealing with risk calculation.
Before launching credolab in 2016, Barcak held senior roles in leading banks – including BNP, Citibank, Intesa Sanpaolo Group, and PlatinumBank. Barcak is known for his ability to envision and produce successful outcomes in complex situations. He is driven by the belief that our financial systems can be more inclusive and profitable. He told The Fintech Times:
Tell us more about your company and its purpose
The lack of predictive data is still one of the main pain points of any financial institution. Whether in developing or developed countries. Credolab’s initial purpose was to provide a data-driven solution promoting financial inclusion by helping various lenders better understand their customers and reduce loan rejection rates.
We analyse smartphone and web behavioural metadata to create bank-grade digital scorecards and data enrichment solutions. As for now, our platform is also in high demand in risk management, fraud prevention, marketing segmentation, and other verticals. With our SDK technology, our clients can gain very rich insights and scores that lead to clear and measurable benefits. For example, up to a 40 per cent predictivity uplift, up to a 22 per cent drop in fraud costs, and up to a 32 per cent increased approval rate.
Additionally, our solutions are fully compliant with privacy regulations. We focus on privacy-consented metadata. Such as, the number of events added to a calendar or the types of apps installed, rather than personal data.
This ‘data about data,’ is completely anonymised and highly secured. All metadata is stored in JSON format on the credolab cloud. We never share raw data with clients. Unlike Meta or Google, we don’t collect data to show you targeted advertising. We give people a fairer assessment in terms of getting credit or other financial services.
What are some of your recent achievements you’d like to highlight?
Without beating around the bush, I will say that сredolab is definitely on a roll now. After raising a $7million Series A round led by GBG in 2020, we have implemented a go-to-market strategy that is bearing great fruit. Our approach to working in selected priority markets provided a strong customer connection. Our growth is accelerating. We have strengthened our leadership position in Asia, will grow even faster in LATAM and Africa, and will expand our presence in the US and Europe.
With our experience of analysing nearly 200 million digital footprints and scoring more than 22 million people to date, credolab is already working with over 150 corporate clients across nine verticals. This includes big names like banks and neobanks, BNPL, digital lenders, credit bureaus, ride-hailing and EWA apps, insurance companies, and even crypto lenders. Despite the global downturn, 2022 was indeed a year of tremendous momentum for us. And new heights are yet to come.
How did you get into the fintech industry?
Before founding credolab in 2016, more than 20 years of my career have been devoted to risk management and leading teams in banking.
I spent my formative years at Citibank, after which I worked at Intesa Sanpaolo Europe, where I created retail risk management departments from scratch. When someone applies for a mortgage or a credit card at that bank today, the decision will be made using policies and practices established back then on my initiative.
And after that, I went with partners to my first startup, Platinum Bank in Ukraine. It was supported by the IMF, Goldman Sachs and Warburg Pincus. As a chief risk officer, I realised that I didn’t have enough data to make genuinely informed credit risk decisions. So, 10 years ago, I began experimenting with alternative data sources. Such as telco or social media data – even when it was still considered unconventional. And that’s how the credolab idea was born.
What’s the best thing about working in the fintech industry?
It’s certainly the opportunity to be part of a rapidly evolving landscape that is constantly pushing the boundaries of what’s possible. I’m proud to be a part of a mission-driven industry that seeks to improve people’s lives by increasing financial inclusion and reducing economic inequality.
In the last year alone, we have seen significant shifts in this direction. Digital payments have become more accessible and convenient. AI and machine learning are also transforming the fintech industry by improving the accuracy of financial data analysis, fraud detection, and customer service. These technologies can help banks and financial institutions better serve underserved communities. And I am delighted to be part of these processes.
What frustrates you most about the fintech industry?
Fintech companies often operate in highly regulated industries. Navigating these regulations can be complex and time-consuming. Rules are needed to ensure fairness, safety, and accountability in any industry. However, overly burdensome or inconsistent regulations can stifle innovation and hinder companies’ ability to expand into new markets. Therefore, rules must be transparent, predictable, and consistent across jurisdictions.
Additionally, because fintech is linked to traditional banking and insurance, we still face a certain conservative mindset in some areas.
To give a simple example. Working with large financial institutions on almost every continent, we find that few are willing to talk publicly about the use of behavioural data. Despite AI credit scoring solutions advancements, it largely remains the ‘black box’ for traditional lending. This hesitation stems from concerns about the explainability of the results.
For instance, lenders in the US and UK may harbour reservations about a credit score that is even partially generated by AI. Particularly if it may bring bias to the general model in terms of ethnicity, gender, or even ZIP code. As a result, some people in the fintech industry may feel frustrated by the pace of change. However, it’s worth noting that change takes time and that many fintech companies are making significant strides in improving financial services for people worldwide.
How have your previous roles influenced your career?
As I mentioned earlier, our team and I personally came up with the idea for credolab technology to solve a problem we experienced firsthand as financial sector employees. A lack of data to assess credit risk. We aimed to help any lender and bank improve operations, reduce unit economics and reduce the cost of their risk. Our team comprises subject-domain experts on the ‘other’ side of the fence. So we are all fluent in that language.
What’s the best mistake you’ve ever made?
Well, my previous career was in risk management, so we never make mistakes! Of course, I’m kidding – mistakes are widespread. Most of the time, they are not very funny, though. That’s why risks should not be underestimated.
For example, in the Silicon Valley Bank collapse that is being discussed right now, much of the blame lies with the executives. Those who mismanaged their risks and put most of their deposits into long-term bets. SVB did not have a chief risk officer for eight months. No one will question the importance of strict risk management practices to avoid such problems. Of course, this is not the only problem. I wouldn’t rule out a loosening of the regulator’s oversight here, which allowed SVB to avoid stress tests of its portfolio.
What has the future got in store for your company?
We have more than ambitious plans for this year: better product, more customers, and more expansive geography.
From a product standpoint, we are almost ready to launch the marketing solution aimed at predicting the personality type of any Android and iOS user by looking at device metadata.
From a data point of view, we are about to launch a new set of insights called “Outlier detection”. The idea is to identify the users within a portfolio that display behaviours different from the typical/standard behaviour of the aggregated portfolio.
And, of course, to support our plans, we continue to work on raising further funding.
What are the next key talking points or challenges for your industry as a whole?
2023 is shaping up to be a year of significant change for fintech. The economic landscape is uncertain, and companies have to adapt to changing market demands to succeed. I think the biggest ‘pain’ for fintech right now is raising funding. According to the CB Insights report, global fintech investment activity steadily declined throughout 2022. Funding dropped by 46 per cent from 2021’s record levels.
As the industry continues to grow, more and more players are entering the market. This is leading to increased competition for customers, talent, and funding. This can be incredibly challenging for smaller companies or startups that may not have the same resources as more established players.
Venture investments are undoubtedly the fuel you need to grow any business. But I suggest not pursuing investment as a goal but focusing on developing new products that your existing customer base will want to buy. Then you can feel solid ground under your feet and perhaps become one that investors chase themselves.
Despite the challenges, the future of fintech looks promising. Their success depends on their ability to manage risk, improve their products and optimise their unit economics. Those focusing on these critical areas will have a better chance of weathering any economic challenges.