In profile: Peter Barcak, CEO and founder of credolab

Killing two birds with one stone – a phrase often heard when it comes to efficiency, and extremely apt to describe it credolab‘s, the behavior risk scoring solution provider, service. Not only does the platform help organizations with risk management, it is also looking to improve financial inclusion.

To discuss how the company does this, Fintech Times sat down with Peter Barcak, CEO and founder of credolab. After over 20 years in senior roles in multinational banks and startups, Barcak is an experienced leader. He has had a concrete impact on industries involved in risk calculation.

Before launching credolab in 2016, Barcak held senior roles in leading banks – incl GDP, Citibank, Intesa Sanpaolo Groupand PlatinumBank. Barcak is known for his ability to envision and produce successful results in complex situations. He is driven by the belief that our financial systems can be more inclusive and profitable. He told Fintech Times:

Tell us more about your company and its purpose

The lack of predictive data remains one of the main pain points of any financial institution. Either in developing or developed countries. Credolab’s original purpose was to provide a data-driven solution that promotes financial inclusion by helping diverse lenders better understand their customers and reduce loan rejections.

We analyze smartphone and web behavioral metadata to create bank-grade digital scorecards and data enrichment solutions. Currently, our platform is also in demand in risk management, fraud prevention, market segmentation and other verticals. With our SDK technology, our customers can get very rich insights and scores that lead to clear and measurable benefits. For example, up to 40 percent increase in predictability, up to 22 percent reduction in fraud costs and up to 32 percent increase in approval rate.

In addition, our solutions are fully compliant with privacy regulations. We focus on privacy consented metadata. For example, the number of events added to a calendar or the types of apps installed, rather than personal data.

This ‘data about data’ is completely anonymised and highly secured. All metadata is stored in JSON format on the credolab cloud. We never share raw data with customers. Unlike Meta or Google, we do not collect data to show you targeted advertising. We give people a fairer assessment when it comes to getting credit or other financial services.

What are some recent achievements you would like to highlight?

Without beating around the bush, I will say that сredolab is definitely on a roll now. After raising a $7 million Series A round led by GBG in 2020, we have implemented a go-to-market strategy that is bearing great fruit. Our approach to working in selected priority markets provided a strong customer connection. Our growth is accelerating. We have strengthened our leadership position in Asia, will grow even faster in LATAM and Africa, and will expand our presence in the US and Europe.

With our experience of analyzing nearly 200 million digital footprints and scoring more than 22 million people to date, credolab already works with over 150 enterprise clients across nine verticals. This includes big names like banks and neobanks, BNPL, digital lenders, credit bureaus, ride-hailing and EWA apps, insurance companies and even crypto lenders. Despite the global slowdown, 2022 was indeed a year of tremendous momentum for us. And new heights have yet to be reached.

How did you get into the fintech industry?

Before founding credolab in 2016, more than 20 years of my career have been dedicated to risk management and leading teams in banking.

I spent my formative years at Citibank, after which I worked at Intesa Sanpaolo Europe, where I created retail risk management departments from scratch. When someone applies for a mortgage or a credit card at that bank today, the decision will be made using guidelines and practices established at the time on my initiative.

And after that I went with partners to my first startup, Platinum Bank in Ukraine. It was supported by IMF, Goldman Sachs and Warburg Pincus. As a risk manager, I realized that I did not have enough data to make genuinely informed decisions about credit risk. So 10 years ago I started experimenting with alternative data sources. For example, data from telephone or social media – even when it was still considered unconventional. And that’s how the credolab idea was born.

What is the best thing about working in the fintech industry?

It is certainly the opportunity to be part of a rapidly evolving landscape that is constantly pushing the boundaries of what is possible. I’m proud to be part of a mission-driven industry that seeks to improve people’s lives by increasing financial inclusion and reducing economic inequality.

In the last year alone, we have seen significant changes in this direction. Digital payments have become more accessible and convenient. AI and machine learning are also transforming the fintech industry by improving the accuracy of financial data analysis, fraud detection and customer service. These technologies can help banks and financial institutions better serve underserved communities. And I am happy to be a part of these processes.

What frustrates you most about the fintech industry?

Fintech companies often operate in highly regulated industries. Navigating these rules can be complicated and time-consuming. Rules are necessary to ensure fairness, safety and accountability in any industry. However, overly burdensome or inconsistent regulations can stifle innovation and prevent companies from expanding into new markets. Therefore, the rules must be transparent, predictable and consistent across jurisdictions.

In addition, because fintech is linked to traditional banking and insurance, we still face a certain conservative mindset in some areas.

To give a simple example. Working with large financial institutions on almost every continent, we find that few are willing to talk publicly about their use of behavioral data. Despite advances in AI credit scoring solutions, it remains largely the “black box” of traditional lending. This hesitation stems from concerns about the interpretability of the results.

For example, lenders in the US and UK may take issue with a credit score that is even partially generated by AI. Especially if it might introduce bias to the overall model in terms of ethnicity, gender, or even zip code. As a result, some people in the fintech industry may feel frustrated by the pace of change. However, it is worth noting that change takes time and that many fintech companies are making significant strides in improving financial services for people around the world.

How have your previous roles influenced your career?

As I mentioned earlier, our team and I personally came up with the idea of ​​credolab technology to solve a problem we experienced firsthand as employees in the financial sector. Lack of data to assess credit risk. We aimed to help every lender and bank improve operations, reduce unit economics and reduce the cost of their risk. Our team consists of domain experts on the “other” side of the fence. So we are all fluent in that language.

What’s the best mistake you’ve ever made?

Well, my previous career was in risk management, so we never make mistakes! Of course, I’m kidding – mistakes are rife. Most of the time, though, they’re not very funny. That is why the risk should not be underestimated.

For example, in the Silicon Valley Bank collapse that is being discussed right now, much of the blame lies with the managers. Those who mismanaged the risk and put most of their deposits in long-term games. SVB had not a risk manager for eight months. No one would question the importance of strict risk management practices to avoid such problems. Of course, this is not the only problem. I would not rule out a loosened regulatory control here, which allowed SVB to avoid stress tests of its portfolio.

What does the future hold for your company?

We have more than ambitious plans for this year: better product, more customers and more expansive geography.

From a product standpoint, we’re almost ready to launch the marketing solution that aims to predict the personality type of any Android and iOS user by looking at device metadata.

From a data point of view, we are about to launch a new set of insights called “Outlier detection”. The idea is to identify the users in a portfolio who exhibit behavior that is different from the typical/standard behavior of the aggregated portfolio.

And of course, to support our plans, we continue to work to raise additional funding.

What are the next key points or challenges for your industry as a whole?

2023 looks set to be a year of significant change for fintech. The economic landscape is uncertain, and companies must adapt to changing market demands in order to succeed. I think the biggest “pain” for fintech right now is raising funding. according to CB insights reportglobal fintech investment activity fell steadily through 2022. Funding fell 46 percent from 2021’s record levels.

As the industry continues to grow, more and more players enter the market. This leads to increased competition for customers, talent and funding. This can be incredibly challenging for smaller companies or startups who may not have the same resources as more established players.

Venture capital is undoubtedly the fuel you need to grow any business. But I suggest that you don’t pursue investment as a goal, but focus on developing new products that your existing customer base will want to buy. Then you can feel solid ground under your feet and perhaps become someone that investors chase themselves.

Despite the challenges, the future of fintech looks promising. Their success depends on their ability to manage risk, improve products and optimize unit economics. Those who focus on these critical areas will have a better chance of overcoming any financial challenges.