Credable seeks to accelerate embedded finance adoption in emerging markets in 2023

Print

Email

An increasing number of firms, across industry verticals, are seeking to integrate financial services into their core product offering. From e-commerce marketplaces to telecom operators and logistic firms, many businesses are increasingly embedding financial services to drive revenue growth and boost customer retention. Alongside developed markets, the proliferation of embedded financial services can be also seen in emerging markets, where a vast majority of the population still remains unbanked or underserved by conventional financial institutions.

While e-commerce marketplaces, telecom operators, and logistic firms have been playing an important role in driving financial inclusion in lesser developed markets, such as Africa, banking infrastructure providers have been central to the rise of the embedded finance market globally. These firms are allowing businesses, across industry verticals, to integrate financial services for their customers. To further accelerate the adoption of embedded finance products and services, especially in emerging markets, these firms are raising venture capital and private equity funding in 2023.

• In March 2023, Credable, an innovative startup in the banking infrastructure space, announced that the firm had raised US$2.5 million in a seed funding round, which was led by Ventures Platform and included participation from Launch Africa, among others. Based in Dubai and focused on the African market, Credable launched two products in May 2022. In Tanzania, the firm launched a 30-day loan product in collaboration with Vodacom M-Pesa. In Kenya, the firm launched a short-term lending product for Diamond Trust Bank. Since then, the firm had entered into various strategic alliances and launched six products across three markets, including Tanzania, Kenya, and Uganda.

In the three markets, where the firm is currently operational, it has garnered widespread traction from consumers as well as businesses. More than 1.2 million people have opened an account on its platform and over 200,000 customers and SMEs have used the banking products offered by Credable in Tanzania, Kenya, and Uganda. The platform offered by Credable has helped disburse US$5 million worth of loans and has attracted US$3 million of deposits into its savings products.

With the March 2023 funding round, the firm is planning to use the capital for expanding its presence in more emerging markets across Africa and Asia, where the regulatory environment is more conducive for business growth. In addition to its strategy of geographic expansion, the firm is also planning to use the capital for launching more products and collaborations in 2023.

To earn revenue, the firm has employed a revenue-sharing model with all of its business partners in Tanzania, Kenya, and Uganda. In Nigeria and Pakistan, the markets where the firm aims to expand its presence in 2023, Credable is expected to adopt the same revenue-sharing model, instead of the cost-per-service model.

The majority of the population still remains unbanked and underserved in Africa. This indicates that Credable has a lot of room to drive its growth and build a profitable business in the region. But to achieve scale and drive mass adoption of its banking products, Credable will need to raise more multi-million-dollar deals from venture capital and private equity players over the next few years.

The fintech ecosystem has expanded rapidly over the last five years in Africa, amid the growing desire to access financial services among consumers. The trend is projected to further continue from the short to medium-term perspective, which means a lucrative growth opportunity for global investors. Consequently, the amount of funding, from venture capital and private equity players, is also expected to increase in the African market over the next five years. All of these factors will keep aiding the embedded finance market growth in emerging markets like Africa from the short to medium-term perspective.

To know more and gain a deeper understanding of the embedded finance industry in Africa, click here.