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5 must-have API integrations for lenders to reduce NPL

API integrations to reduce NPL

The threat that bad loans pose to lenders can’t be overemphasized. A lot of lenders have had to write off an alarming amount of non-performing loans (NPL). Before going into the money lending business, the biggest concern you might have been confronted with was probably “what if they don’t pay back?”

This is where technology comes in very handy. When building or sourcing for the technology you need to develop your digital lending proposition, it’s important to remember that distribution channels (mobile app, web app, USSD) are only a part of the solution. What goes on behind the scenes; the lending stack, is where you are truly able to protect yourself and ensure you get paid. Integrations are a key part of your lending toolbox. Integrations via API to other ancillary platforms, allow you to leverage on the tech, data and functionalities of the best providers to improve the quality of your loan flow. 

API integrations for these five functionalities are absolutely essential for any lender serious about scaling safely, loan recovery, and having a chance at profitability:

Credit Bureaus

Lending through digital channels without access to a credit bureau is like doing a dangerous dance on the edge of a cliff. This is not the kind of leap through which faith can sustain you. In the digital lending ecosystem, it’s becoming increasingly important to keep track of the bad actors and weed them out. You can integrate into CRCFirstCentral or CreditRegistry to find out if a potential borrower has been reported and blacklisted for defaulting on a loan or other harmful borrowing habits. You can take this a step further and block them from accessing loan facilities on your platform. 

While API calls with credit bureaus can be expensive, lenders with Lendsqr enjoy significant cost reductions through our special partnership with CRC and others.

You can integrate into a blacklist engine such as karma.ng to report bad borrowers and block the reported ones from your platform as well.

Payments

Integrating with a payments provider such as Paystack is vital for collections and facilitating transactions. This is especially useful because borrowers can tie their debit cards to their loan profiles. Gone are the days when lenders had to wait for borrowers to manually repay their loans (not every borrower is reliable anyway). 

With cards, lenders are able to trigger collections which automatically make attempts to retrieve the full loan amount from the borrower’s card when their loan is due. Smart platforms, such as we have on Lendsqr, have partial debits, which makes several attempts to collect the full loan amount so no worries if the borrower does not have the full amount on the due date. All card transactions are processed by the payment provider.

Bank Statements Provider

Not every borrower is truthful. You should know this by now. Expecting a borrower to declare their true income and cash flow will not always yield the best results. Integrating with a bank statements provider such as Mono saves your business from having to rely on the goodness of anyone’s heart. 

Bank statements are very informative and effective for scoring. Income, account inflows, outflows and balance data can be gotten from bank statements. What better way to determine a borrower’s capability? This is a great way to find out if borrowers are actually able to repay you.  

BVN Verification

Lenders are looking to ensure that they are able to meet borrowers’ cash needs quickly and easily these days. However, this in no way suggests that due diligence should be abandoned for speed. You might not get to meet borrowers in person anymore but the availability of data makes this so you can still verify borrowers’ identity

Lenders usually require borrowers to submit their BVN information in order to get a loan. Integrating with a BVN verification service such as VerifyMe allows you to confirm each borrowers’ identity and ensure no identity theft has even occurred. Report and block borrowers’ who attempt to apply for loans with BVN details that do not belong to them. 

Direct Debit

Are you really still relying on the goodness of borrowers’ hearts to get paid in 2022? Our heart goes out to you and the scary NPL rate that lies ahead. Direct debits give your platform the ability to retrieve loans directly from borrowers’ bank accounts. This is perhaps the holy grail of loan recovery. This can be done through Remita. However, it requires borrowers to submit a mandate form to their bank. 

The direct debit mandate allows lenders to trigger multiple collection attempts and makes provision for higher than the loan amount to accommodate applicable fees and penal charges. Going with the direct debit option also gives you more assurance than debit cards for loan repayments. It has a higher success rate than debit cards since you’re pulling the money directly from the borrowers’ bank account. Unlike debit cards, which can be reported lost or stolen and will have to get canceled, a bank account isn’t running away. Partial debits with cards might reject certain cards or providers but direct debit doesn’t work that way.

Lendsqr has all the integrations a lender needs

The importance of these integrations is probably not enough to abate your worries about cost and the stress of looking to execute these yourself. This is where Lendsqr comes in. Lendsqr’s LaaS platform already comes equipped with the relevant integrations so all you have to do is sign up on Lendsqr for free and the entire lending stack is  available to you in minutes. 

You can also contact growth@lendsqr.com to find out about the other integrations available for your lending business. We’re here to support you and help your lending business succeed. You shouldn’t have to drown in bad loans. 

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