South African fintech Optasia reports 58% revenue growth amid expansion of AI lending
In South Africa, international fintech operator Optasia reported a 58% increase in revenue in its interim results, while its Distributed Value metric rose by 46%, Daily Maverick reports. The company expanded into the markets of Gabon and South Sudan and is also increasing its presence in Pakistan and Indonesia.
Borrower assessment
According to Optasia, the default rate for the period was 1.3%. By comparison, WesBank operations at FNB had a rate of 1.05%, according to data released last week. The article’s author notes that WesBank loans are secured by vehicles.
Optasia says it does not require bank statements to make lending decisions. Instead, the platform analyzes the volume of funds passing through an account and the way they are withdrawn. The company reports using 10,000 parameters to determine who should receive a loan.
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Algorithm risks
The Daily Maverick author believes that artificial intelligence enables fintech companies to significantly speed up the assessment of applications. At the same time, in his view, an error in an algorithm could lead to the mass approval of loans for people who will be unable to repay them. In such a scenario, the company would have to collect debts and determine the cause of the system’s incorrect decisions.
Traditional banks are also strengthening ties with fintech. FirstRand owns 26.1% of Optasia, while Absa appointed Sithio Lopokoiyit to lead its personal and private banking division after his work with fintech pioneers M-Pesa in Kenya.
The author suggests that regulators will have to find a balance between tightening rules for international fintech companies and allowing them to expand access to financial services in developing countries.
