…Sets course with multi-channel low-level retail lending without collateral as the next promising frontier in financial inclusion drive
Historically in Nigeria, there have been long-standing gaps in availability of credit or loans to individuals and businesses within underserved demographics of the Nigerian population. These people have experienced difficulties in accessing unsecured, short-term micro-loans from financial instructions for several reasons. Interswitch has now partnered with 6 leading banks and 3 innovative credit providers to address this challenge with the introduction of the Interswitch Lending Services Platform.
This service essentially resolves the ‘missing middle’ challenge by providing a holistic proprietary credit analysis, scoring & management technology which bank and non-bank credit providers can leverage to provide non-collaterized micro and nano-loans to individuals and SMEs across various channels. It bridges the gaps currently existing in Nigeria as far as access to credit between deserving but underserved individuals and SMEs on one hand, and credit providers on the other, by means of reliable lending and de-risking engines based on customers’ transaction history and digital footprints.
Customers can use any of the ATM, mobile banking apps or USSD channels to access loans, essentially achieving the goal of allowing different customer segments to meet personal and small business needs, thereby accelerating growth in business activities within Nigeria’s resurgent economy.
The solution focuses on enhancing financial inclusion by providing a tested and reliable end-to-end credit administration infrastructure, which is open and flexible enough to accommodate both bank and non-bank lenders. The Platform has been integrated by Interswitch to what is perhaps the largest customer database, allowing almost 16million Nigerians (which includes active customers on Quickteller) to be assessed for possible qualification for a loan. Interswitch had formed strategic partnerships with a number of credit providers to efficiently target customers who are available on those partner platforms, offering nano-loans at attractive interest rates and based on available credit history and predictive analytics through information technology to determine credit-worthiness.
Speaking about the essence of the lending platform, the Divisional CEO for Switching and Processing at Interswitch Group, Akeem Lawal volunteered:
“What we’ve basically done is to partner with key lending players in the industry to help accelerate the growth of retail lending to the underserved population in Nigeria through reliable credit models. We are starting with customers who do transactions on the Interswitch network. Our partners include banks with whom Interswitch has established long term relationships.
Addressing the question around the reason why Interswitch is doing this, Akeem added:
“We have done this to provide accessible credit for the financial needs of customers who are presently underserved by mainstream finance, or who are excluded in one way or another from being able to access credit through currently existing conventional channels. We are doing this by addressing the problem of access, reach and risk in a novel way that ensures that we can achieve nationwide scale.”
According to Interswitch, customers who access loans through this platform can conveniently make their loan repayments through a variety of channels such as – using their cards, at ATMs, online at quickteller.com or through Bank branches.
Another important consideration is that customers who typically use electronic channels or embrace cashless transactions are more likely to get better loan offers than others who have not embraced e-payments, simply because most of the historical data is generated on the basis of usage of e-payment channels, such as Quickteller.com.
Current bank partners who are on board Interswitch Lending Services include FirstBank, UBA Bank, Heritage Bank, Unity Bank, Fidelity Bank and Ecobank. There are also 3 Lending Partners; Kwikcash, Paylater and Ferratum.