Fintech Interview with Peter Barcak, Founder and CEO of credolab

Peter Barcak shares valuable insights on credolab’s product offering and his perceptions of the emerging Fintech landscape.

1. Can you tell us more about yourself? How did you get into entrepreneurship?

I’ve spent more than 20 years in senior roles at multinational banks, dealing with risk calculation. Hopefully, without bragging, I can call myself a seasoned executive and risk manager. Risk management is my ‘home base,’ and I think working in that industry for so long has certainly coloured the way I approach business decisions. What drives me is the ability to deliver successful results in difficult situations and the belief that our financial systems can be more inclusive and profitable. 

2. Can you give us a brief of your career before credolab?

Before launching this fintech startup in 2016, I held senior roles in leading banks, including BNP, Citibank, Intesa Sanpaolo Group, and Platinum Bank. At some point, I realised I did not have enough data to make the right decisions about credit risk. So almost ten years ago, I started testing different data that was alternative even for that time, such as telco or social media. That’s how the idea of credolab technology came about, designed to help any lender and bank improve operations, reduce unit economics and reduce the cost of their risk.

3. Could you tell us more about credolab and how the company has evolved over the last couple of years?

Credolab is the largest developer of bank-grade digital scorecards and data enrichment solutions built from smartphone and web behavioural metadata. Our pay-per-use solutions work with all unsecured lending products and are available to banks and neobanks, digital lenders, BNPL players, and any industry at the intersection with financial services. Historically, we have worked predominantly, but not exclusively, with the financial sector. We have recently evolved our platform focused on mitigating risk and detecting fraud to improve marketing campaigns’ performance, decrease customer acquisition costs (CAC), and target the right audiences. As a result, we now have a growing number of clients interested in our outcome-based marketing and data enrichment solutions.

Credolab analyses over 70,000 data points with a proprietary embedded tech and a scoring engine routed in machine learning algorithms that convert digital footprints and behavioural metadata into highly predictive intent scores (i.e. the probability of accepting a loan offer or applying for a credit card) and very granular customer personas that make buying audiences a lot more accurate than before. What used to be a solution catered mainly to risk and fraud officers is now available to marketing officers too. What is unique and what sets us apart from competitors is that we don’t process any personal data, not even cookies. 

When chatting with potential clients and partners, they are often surprised that we are a startup. Many people get the impression that credolab is already a big corporation. I guess we are on our way to it. Our team has raised $8,1 million to date, most recently in a $7 million Series A round led by GBG in August 2020. Other investors include Access Ventures, Walden International, Fintonia Group, and FORUM. We have successfully deployed part of the Series A funds by implementing a GTM which puts boots on the ground in the selected priority markets. Credolab now has 120+ clients, including well-known fintech companies and unicorns, in over 30+ countries in Europe, SE Asia, Africa, and North and South America. 

4. What excites you most about working in this industry? 

I am a person who is used to working with numbers, not texts. I am endlessly fascinated by how dry data in skilful hands turns into true masterpieces that, among other things, help solve major social problems.

When we started working with financial institutions as clients, we realised that credolab promotes a greater scope of financial inclusion and makes lenders more profitable by helping them understand their customers better. As it turns out, most lenders rely on out-of-date data offered by credit reporting agencies (CRAs) or bureaus as part of the creditworthiness assessment of borrowers. However, the bureaus can only provide scores for applicants with an existing credit history, usually those in the middle to upper-income groups. Without that same data, many people have remained financially excluded. With credolab technology, we are helping lenders reach more people and fulfil one of any financial institution’s key goals: providing financial services to foster the socio-economic development of the country in which they operate. We’re also working with credit bureaus as clients, so we see a commitment to inclusion throughout the industry.

As for the people in marketing, there are many problems we can help solve. With better data, marketers can improve the outcome of their marketing campaigns. Imagine if you could target 1,000 customers with a credit card offer knowing that 900 are highly likely to convert rather than targeting 1,000, hoping that at least 50 accept the offer. Imagine if you could improve the way you buy audiences based on a technographic segmentation and a detailed app ownership view of your users because you know what tech, device, and apps your best customers already use. Imagine if you could improve your return on ads spend (ROAS) by displaying your ads to people that are highly probable to click and if you could display ads only to new people even in the absence of cookies to know if that is a returning customer or not.

5. Can you shed some light on your product suite?

Credolab adds value at the meeting point of risk, fraud and marketing. Our proprietary data modelling pipeline, rooted in machine learning algorithms, develops customised digital scorecards trained on credit risk, fraud, and marketing outcome data. These solutions increase approval rates, decrease the cost of risk, and help lenders to make better decisions across the entire funnel, not just individual silos. Our deep expertise in fintech enables credolab clients to market to new segments of customers and deliver increased business value that improves the overall bottom line.

A lower marketing cost of acquisition (CAC) comes with a higher approval rate. With lower fraud and a decreased cost of risk comes higher unit economics, more inadequate provisions, and more capital that can be deployed to fuel further growth.

As for how it all works, we made it very easy for our clients to integrate with our platform. Without being too technical, our technology requires to be embedded in the front end of clients, mobile apps or website on both and to connect with our API. The main effort required by our clients is simply the prioritisation of the integration. The “IT heavy lifting” is done by credolab. 

6. Tell us a bit about your culture. What makes credolab’s culture unique?

The сredolab team is in the technology business, but we’re really about the people. We want to do everything we can to make the world a little better for everyone. Most of us have worked in banks and consumer credit organisations and understand very well the needs, pain points and specific problems of our clients. We all speak the fintech language fluently. Also, our culture is primarily defined by the fact that we are a multinational team. In addition to the Singapore office, credolab has offices in Miami and London, as well as a distributed team in Sao Paulo, Mexico City, Dubai, Jakarta, Manila, Bangalore, Sydney and Nairobi. Despite such long distances, we are absolutely on the same page in our working goals and drive to grow our business. 

7. In your opinion, what are the most exciting topics in FinTech right now? How do you keep up with the constantly changing landscape?

The fintech landscape is changing rapidly. Previously, innovation might have taken years, but we are now talking about days. I understand the pressure that CEOs, marketing specialists, and risk officers are under today when deciding to introduce new technologies. Especially against the economic crisis, it’s more important than ever to understand customers. 

Plenty of companies we were talking to declared that they use alternative data. When we start looking deeper, it turns out that they are not even close. A significant BNPL player in the US thought they were already collecting a digital footprint. After analysing their actual data, we realised that they contained only 8% of the data credolab collects. Not only that, they were collecting some preliminary information that, based on our experience, was not even useful for risk analysis or fraud detection. Most marketers are still focused on enriching their data with whatever can be found elsewhere without realising they are already sitting on a wealth of information about their customers. With the right tech tools and expertise, credolab can help mine deep behavioural insights of the existing users that can be leveraged to improve the way how new users are originated, arguably at a cheaper cost.  

So, using customers analysed through the lenses of alternative data as a proxy for those without enough data, credolab proprietary Machine Learning algorithms help identify pockets of opportunities within the same user base that were thus far ignored. 

8. How do you see the future of Credit Scoring with AI?

I dream of a marketer being able to pre-screen and pre-score customers at the programmatic ads level. Imagine if a marketer could use different bidding strategies optimised to drive conversions, not just clicks, combined with an automated media buying process focusing exclusively on the most valuable and relevant audience members. We have done this for credit scoring and fraud detection. And now we are doing it for marketing optimisation too.

Audiences selected in this way will not only be the ones with a high intent to accept the offer or a high probability of applying for a credit card but will also be automatically scored for their probability of defaulting on their first payment. It’s not science-fiction. It is already here.

9. What are credolab’s plans for expansion and growth? Where do you see it in the coming years?

We are clearly focused on strengthening our leadership position in Asia, accelerating growth in Latam and Africa, and expanding our presence in the US and Europe. Moreover, we are on track to deliver positive EBITDA in the year’s final months. Customer acquisition has been strong and growing.

10. How do you stay motivated? What are your key learnings from your career so far?

I stay motivated, knowing that my subsequent decisions are informed by the lessons and life experiences I have gained so far. I believe in leading by example, and these very lessons are also the ones I share with my children to strengthen their characters and build strong foundations to conduct their lives on and make their own decisions.

11. What movie/book has inspired you recently?

“Ten Global Trends Every Smart Person Should Know: And Many Others You Will Find Interesting” by Ronald Bailey and Marian L. Tupy. Since I believe that you can’t fix what is wrong if you don’t know what’s actually happening, this book was essential for me to see current issues from a much larger perspective and to see them more clearly, almost the stone-cold truth about our civilisation. I liked this book because it was also very optimistic!

12. What is the most significant piece of advice you would want to give to company leaders?

The most important advice I could give them is to surround themselves with the best people they can find. These people don’t need to come from Ivy League schools or necessarily have super high IQs. They need to understand your business, like it and feel part of something bigger. They must also fit well with the culture you have created and be agents of change. You want them to work for you not because they need a job but because they want to work for you and make your company better, more extensive, and more successful.

For more such Updates Log on to https://fintecbuzz.com/ Follow us on Google News Fintech News