Nigeria has a vibrant, yet complex, financial system. In the past, borrowing was restrained by strict conditions imposed by banks. However, things have changed with the emergence of fintech disruptors. These technology-enabled platforms have disrupted the traditional borrowing culture, making it more accessible to the underserved market and leading to a surge in borrowing.
The Nigerian financial landscape has been reshaped by the recent rise of these fintech companies. These technology-driven entities have filled the gaps left by traditional banking institutions. By prioritising accessibility and convenience, they have become catalysts for expanding credit access and promoting a culture shift towards financial inclusivity.
In a conversation with Funsho Akinwumi, Deputy CEO of Renmoney, a leading digital bank in Nigeria, we delved into Nigeria’s lending infrastructure and space. Funsho also shared the genesis of Renmoney’s journey, its unique offerings, the challenges faced in the Nigerian lending landscape, and the path forward for the company.
Serving the underserved: Bridging Nigeria’s credit gap
Renmoney emerged from a visionary standpoint—a need to serve the vastly underserved market in Nigeria.
According to Funsho, in the past, traditional banks had tough conditions for loans, making it hard for many customers to qualify. Renmoney wants to make getting loans easier without lots of paperwork or collateral, while also offering an extensive suite of banking products.
Funsho highlights the company’s mission to make finance easier for millions of underbanked individuals and small business owners.
“Renmoney started out as a vision from the founders on the need to serve the underserved market,” shared Akinwumi. “We realised the need, and we are here to serve and close that gap by offering convenient and affordable banking services to our customers,” he says.
A pivotal differentiator for Renmoney lies in its inclusivity. They pride themselves on offering loans for diverse needs, from rent and school fees to business expansion or vehicle purchases. The standout feature? Accessibility and speed. Renmoney enables loan applications through their app or website, promising loan disbursal within minutes without demanding exhaustive documentation.
Akinwumi explains this succinctly:
Our major distinguishing factor is that there is a loan for everybody. We will not ask you for documents, papers, or collateral. All you need to do is download the Renmoney app or go to the Renmoney website and apply for a loan, and once your application is approved, you will get your loan disbursed to you in minutes.”Funsho Akinwumi
Navigating regulatory and environmental factors
Navigating the Nigerian credit market, particularly for a consumer lender like Renmoney, isn’t without hurdles. While regulation may tend to favour traditional banks, microfinance lenders face challenges in customer identification, address verification, income validation, and efficient debt collection.
According to Funsho, navigating these four core tenets of lending in an environment like Nigeria requires leveraging technology and strategic collaborations, and this is how Renmoney tackles these obstacles at various stages.
Elaborating on Renmoney’s tech arsenal, Akinwumi emphasised AI’s role in identity validation, citing unique verification methods. He also noted that unique in-house tech innovations play a pivotal role in streamlining processes and facilitating precise lending decisions.
“Our technology can confirm your face is the same as the person you say you are. All that is needed is that you go to the app, click on your video, and just move around your video. We can take your video and compare it to any picture we have of you in any database in the world. We can then confirm if you are the right person.”
While identifying regulatory gaps, Akinwumi advocated for expanded databases, open banking, and collaborative efforts between banks and fintechs to enhance information sharing, ultimately aiding efficient debt collection.
Adapting to evolving customer needs
As per the Enhancing Financial Innovation and Access (EFInA) report, approximately 40% of Nigeria’s adult population, representing over 38 million people, now have access to formal financial services, showcasing a notable increase in financial inclusion.
Fintech platforms have played a pivotal role in this transformation, offering convenient and accessible avenues for borrowing and enabling individuals, particularly the unbanked and underbanked, to access loans for various needs.
In this regard, Renmoney prioritises convenience, offering quick loan access while granting second chances to previously defaulted individuals. Additionally, their platform extends beyond lending, incorporating savings and transactions to cater to broader financial needs.
“Beyond lending, Renmoney envisions becoming a comprehensive banking solution,” Akinwumi shared.
“You can apply for a loan, transfer, save, and make payments on the Renmoney app in the comfort of your home with no issues or hassles whatsoever!“
Akinwumi also emphasised AI and machine learning’s potential in leveraging digital footprints to make informed lending decisions, making it a game-changer in the industry’s future. “I think AI is going to be critical,” he says.
For us, artificial intelligence is the use of information to tailor the best possible banking solution for our customers.Funsho Akinwumi, Deputy CEO of Renmoney
Risk mitigation strategies and user data security
Recently, there has been a surge of illegal lending platforms, also known as loan sharks, and their loan collection antics and misuse of customer data in the country. This has raised so much concern for the federal government as well as the commission in charge of consumer protection, the Federal Competition and Consumer Protection Commission (FCCPC).
Recently, the commission released a ‘Limited Interim Regulatory/ Registration Framework and Guidelines for Digital Lending 2022’ to regulate the digital lending space and make registration and approval a prerequisite for companies seeking to operate in the space.
According to Funsho, Renmoney relies on robust risk management fueled by data analytics and relevant tools for efficient debt collection. In upholding user data security, we are compliant with the National Data Protection Regulation (NDPR) and, as such, deploy tools to protect our customers against cyber threats. In addition, we promote active engagement with our customers to educate them on data protection.
“We prioritise the security of our customers’ information by strictly following National Data Protection Regulation requirements as well as implementing robust privacy protocols to safeguard sensitive data.”
Akinwumi adds that user feedback stands as the cornerstone of Renmoney’s growth. According to him, we actively seek and implement customer insights garnered through various touchpoints, ensuring products align with user needs.
“We have built this company to make our users happy. Customer satisfaction is our top priority. Our products are built based on customers’ needs,” he says.
Expansion and Future Vision
Looking ahead, Renmoney aims to consolidate its position as a leading credit-led digital bank, offering comprehensive banking services and encouraging more interactions on its platform to facilitate wider credit access.
Per Funsho, the company operates a microfinance banking (MFB) licence and is more than just a lending platform to its users.
He outlines this:
“We will always remain a credit-led bank, meaning, in addition to loans, we have a suite of banking products like transactions, bill payments, savings, etc. that allow you to do more. The more banking you do with us, the more credit we can give out to you as well. We want to be able to give credit to everybody.“
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