Optasia, a fintech company that provides lending-as-a-service, has announced plans to expand its services to banks across Africa. This move is significant as banks in the region are struggling with high levels of bad loans, particularly in high-value retail segments. In Nigeria, the banking non-performing loan ratio has risen to 7%, while in Kenya, the system-wide non-performing loan ratio remains high at 15.5%. Optasia's AI-driven technology aims to provide banks with better underwriting for thin-file and lower-income customers that they have either priced expensively or avoided.

The company's decision to focus on banks is not its first foray into the sector, but it is making this its primary beachhead. Optasia's default rate has increased by 30 basis points to 1.2%, which the company attributes to its shift in focus towards microfinancing. This move is riskier than its previous airtime advance business, but it also offers higher yields. By targeting banks, Optasia hopes to provide a sharper, more data-rich credit decisioning layer that will enable them to lend more profitably to customers at the bottom of the pyramid.

Optasia's partnership with FirstRand, one of South Africa's largest banking groups, will be the first to benefit from its technology. FirstRand's FNB will integrate Optasia's AI-based technology into its eWallet and other products. This partnership has the potential to enable Optasia to pitch its technology to other banks in South Africa, leveraging FirstRand's scale and influence.

💡 NaijaBuzz Take

Optasia's move to target banks could be a game-changer for the fintech industry in Africa. By providing a more data-rich credit decisioning layer, Optasia could help banks lend more profitably to customers at the bottom of the pyramid. This could have a significant impact on financial inclusion in the region, particularly for lower-income customers who are often priced out of traditional banking services.