Leveraging Digital Technology for Lending

After reaching a record N1 billion daily in loan value, Access Bank Plc is putting in place measures to stimulate lending in the country, writes Nume Ekeghe

Nigerian banks are seen to be unfriendly towards retail customers, with high interest rates and the amount of collateral they demand when granting loans.

In the past few years, several financial technology firms have appeared on the scene, some promising modest amount in loans without collateral, others marketing financial products that make more money for their clients.

One notable example is Access Bank. The bank has been expanding its digital lending portfolio, giving Nigerians quick and 24/7 access to funds for emergencies without any collateral.

Recently, the bank announced that it has hit a record N1 billion daily in loan value.

According to Executive Director, Retail Banking, Access Bank Plc, Victor Etuokwu, “We are at the forefront of digital lending across the continent. This is a deliberate choice we made when we introduced the first USSD based digital lending product in Nigeria based on our deep understanding of our operating environment.

“In the past two years, we have disbursed over 3.5 million loans to individuals. We acknowledge it is no mean feat when compared to where the market is coming from, but this is still a scratch in the overall potential of this market.

“This year alone we have disbursed over N45 billion in over two million disbursements to individuals and have recently witnessed a spike in our volumes hitting N1 billion daily.

“This achievement and our focus on retail lending reiterates our commitment to democratise access to financial services leveraging digital technology.”

Digital Lending

In 2018, Access Bank launched PayDay Loan, a digital lending service. Unveiled in partnership with Remita, the PayDay Loan required no collateral or guarantor, and enabled customers to obtain loans instantly without visiting the bank. It was also designed to enable customers to meet their urgent financial needs before receiving their salaries.

Etuokwu added: “Acquiring loans in Nigeria has always been known to be limiting – either due to access or collateral issues, including the duration of the approval process.

“With our obligations to our customers especially during difficult economic periods, we are emphasising Access Bank’s position in offering lifestyle products and services that meet their financial needs.”

Together with the launch, the bank announced a special USSD code through which customers could utilise the service.

“The product is unique as recipients only have to be diligent salary earners who will now be able to obtain instant loans without stress or involving a guarantor,” the bank said.

Launching QuickBucks

Since the launch of PayDay Loan as its digital flagship product, Access Bank has continued to expand its loan portfolio using innovative algorithms and deep machine learning capabilities. The bank’s retail innovation journey has led it to expand its digital loan offerings to other multi-tenured variants to fit the needs of its diverse retail customer segments.

After Payday, Access Bank also launched a dedicated loan application platform known as QuickBucks in the third quarter of last year. Quickbucks is a Mobile Banking Application for digital loans aimed at improving customers borrowing experience for retail loans.

As part of its commitment to deepening digital finance, the bank has also gone a step ahead to provide access to phone ownership as it recently launched a 12-month Device Ownership scheme where any salary earning customer can select a phone of his choice from our QuickBucks app and walk into any of its partner outlets across the country to pick up the phone.

Supporting Customers

The Head, Digital Banking Business Development, Access Bank, Chinedu Onuoha, recently commented on the bank’s digital innovation drive.

“Our objective is to ensure that there is a digital loan product for every adult Nigerian who has proven means of livelihood because we know that every individual at one point or another requires some form of financial support,” he said.

“Our flagship digital loan product, PayDay Loan, is tailored to help individuals meet their urgent cash needs. Though the tenor for this loan is 30 days, we also have loans with tenors of three months and six months.”

According to the bank, its digital loans are accessible round the clock and can be accessed via its short code. “One can also access it via Access Mobile App and the QuickBucks App; these apps are available for download on the Play Store and iOS stores,” it added. The bank explained that its drive to digitise loans remains the future of banking. According to a McKinsey study, “credit is at the heart of most customer relationships, and digitizing it offers significant advantages to banks and customers alike. For the bank, successful transformations enhance revenue growth and achieve significant cost savings.”

But challenges abound. For example, only about one in five adults and 38 percent of households in Nigeria report having a formal bank account.

If people cannot access (or do not trust) formal banking systems, it will remain difficult to make credit universal and cheap, as it should.

There is also the issue of stiff competition from new players on the scene and government regulation.