Pakistan-based end-to-end digital lending infrastructure provider AdalFi has raised $7.5 million in a funding round, as it rides a “double wave of digitisation”.
The fundraise was led by COTU Ventures, Chimera Ventures, Fatima Gobi Ventures and Zayn Capital, alongside angel investors, including executives from Plaid.
AdalFi’s AI-powered credit scoring and underwriting models enables banks to offer instant loans to consumers and SMEs in Pakistan, including unsecured loan products such as term loans, credit cards and revolving finance facilities for consumers and SMEs, respectively.
Fewer than 4% of Pakistani consumers and businesses take bank loans, according to AdalFi.
Since its launch in July 2021, AdalFi has signed up 14 banks, with its technology deployed by seven of the top 10 banks in Pakistan.
Salman Akhtar, chief executive officer and co-founder of AdalFi, said that Pakistan has 50 million bank accounts, yet only 2 million of these individuals and businesses have any credit relationship with their bank.
“The high cost of loan origination driven by physical verification of identity, assets and financial health (in the absence of credit scoring) has restricted credit access to a thin, top tier of customers,” he added.
“AdalFi’s digital lending platform allows partner banks to instantly credit score the other 95% of their existing customers who have never been lent to and cross-sell loans to them.”
Amir Farha, managing partner at COTU Ventures, said: “The fact that they have already secured partnerships with the leading banks in the country, and have already facilitated new unsecured lending channels for their clients in such a short space of time, gives us confidence that they have an incredibly exciting future ahead of them.”
Akhtar added that AdalFi is “riding a double wave of digitisation”.
“Firstly, a behaviour change is underway as customers go digital, banking app transaction volumes in Pakistan already exceed in-branch numbers. Secondly, the technology shift, pioneered by us, with credit scoring and digital journeys enabling instant loans.
“The AdalFi tech stack enables frictionless loans for qualified customers who are already living in a digital, mobile first world.”