A1 Credit: Using digital channels to give loans to Nigerians and SMEs

Understanding the consumer credit landscape in Nigeria

A1 Credit is helping millions of Nigerians and small businesses get access to credit without asking for an arm and a leg. Their use of digital channels means they are available around the clock, 365 days a year.

While it is true that Nigeria has several lenders, however, the uncertainty that continues to linger is about whether or not these lenders can adequately fulfill the credit needs of over 60 million Nigerian adults today.

The reality that most lenders, such as traditional commercial banks, are generally risk averse, makes it a herculean task for an average Nigerian to access loans when they need it. It has been reported that only 2% out of the 40% of banked adults in Nigeria have been able to get a loan from banks and other formal financial institutions.

Although banks have a vital role to play in providing access to credit, they cannot be held solely responsible for the limited access to credit facilities thus far; Nigerians have a notorious reputation of not repaying on time or not even repaying at al. Consequences be damned! Nevertheless, since banks cannot make money without loans, they have resorted to requesting “an arm and a leg” before granting individuals’ loan requests in the quest to have a reasonably performing loan portfolio.

Consequently, the average Nigerians who cannot meet the eligibility criteria for accessing traditional loans, have turned to the alternative lenders to meet their cash needs. This is where lenders like A1 Credit swoop in on a digital plane to service the vast population of underserved Nigerians. The ease of borrowing from digital lenders like A1 Credit has certainly changed the game with regards to the difficult experiences typically associated with borrowing from traditional lenders.

Despite the fact that alternative lenders are willing and ready to lend money to Nigerians, the risk of repayment is still very high; jeopardizing the existence of many of the lenders.

However, it’s an established fact that technology and data, when deployed reasonably, is able to curtail credit risk; weeding out chronic defaulters and fraudsters and automating back office processes.

Unfortunately, the technology and data to excel in the high-risk consumer and SME loan market in Nigeria are so expensive, they are beyond the reach of most lenders except the few funded by Silicon Valley VCs.

A1 Credit is creating a safe space for borrowers

A1 Capital Solution Limited (trading in the name and style: A1 Credit) is a lending house established with the vision of steering Nigerians out of a deficit credit culture. A1 Credit functions as a finance vehicle to provide a one-stop funding solution for Nigerians (individuals and SMEs) and improve their access to micro credit facilities.

A1 Credit was founded by Dagogo Brown who has amassed over 20 years of experience in both the local and international banking arena. Dagogo has garnered the requisite experience to embark on this venture from his background in retail, commercial and mortgage finance. This led him to put together an A-team of qualified professionals and partner with a competent technology outfit to build an effective credit solution to meet the credit demand in Nigeria.

A1 Credit officially entered the lending space in August 2022 with clear-cut objectives. Their goal is to carve a niche for the organization’s credit offerings and take pride in their ability to deliver a quality customer experience for their borrowers and clients. A1 Credit is positioning itself to deploy top-notch and proactive client management services to their users when needed. It is essential to the organization that they create a friendly transaction space with innovative hitch-free loan offerings for borrowers to enjoy.

“A1 Credit understands the importance of credit to transform the fortune of an SME. This reflects in several additional features they partnered with Lendsqr to design and operationalize in their quest to reach every Nigerian SME and individual with all the cash they need to succeed” said Adedeji Olowe, founder of Lendsqr.

Past experiences paved way for new solutions with A1 Credit

With over 20 years of relevant experience in banking, the subject of credit is not a novel one to the founder, Dagogo Brown. Despite extensive experience with credit at the executive level, A1 Credit still had to do their homework to find the best way to become a leading lender in Nigeria. The team considered various options that could support their digital lending proposition and were particularly on the lookout for a solution that would ensure a seamless and pocket-friendly execution of their plans.

The team wanted to build a custom lending app and a platform that could support their operations end-to-end. With this in mind, it was easy to conclude that a Lending-as-a-Service provider was their best bet. Although the team considered embarking on their own building efforts, the cost implication of this posed an unreasonable challenge. A1 Credit crossed paths with Lendsqr, met with the Lendsqr team and came to the decision that it was a great fit. “The innovation and response pitched by Lendsqr pointed to their understanding of our requirements. We considered building our own platform but Lendsqr has grown the capacity and experience to handle what we wanted. And it came at a good price” expressed Mr. Dagogo Brown; the CEO

The Lendsqr solution

What exactly was it about Lendsqr that gave A1 credit the assurance they needed to hand over their ideas to Lendsqr trusting that they will be executed successfully?

Lendsqr is a Lending-as-a-Service (LaaS) platform that helps lenders launch their loan businesses across channels, at the lowest cost, and with an infinitely adjustable loan decisioning system. Lenders and their team are able to manage their entire lending operation and automate the credit lifecycle from loan origination to collection and recovery is available to lenders who run off Lendsqr. This stack is 100% cloud-based, sustainable, and comprehensive. In order to improve their lending experience, lenders who currently have their own technologies can also benefit from Lendsqr’s APIs. These APIs give users access to Lendsqr’s rapidly expanding data ecosystem as well as a blacklist engine to block bad borrowers.

Lendsqr has integrations with some of the leading payment and data suppliers, as well as credit bureaus, in addition to providing custom credit scoring with a variety of modules and security features to combat dishonest borrowers and fraudsters. Paystack, Mono, Remita, Monnify, Woven Finance, and Cgate are just a few of the payment processors that are immediately available to lenders once they complete the signup process – which takes only about 5 minutes. The objective is to offer lenders comprehensive ecosystem data and in-depth insights that are not available elsewhere. This improves the quality of loan decisions made by lenders. Lenders can receive discounts of up to 50% to access high-quality information to properly evaluate loan applications. Even better, lenders can get a lot of data at no charge.

Lenders can grow their businesses faster through the different channels for loan distribution Lendsqr offers. Lendsqr provides customized USSD, web apps, Android and iOS mobile apps. For lenders who can afford the technology to scale, it typically takes six to twelve months to develop a workable product. On Lendsqr, however, this is not the case. Lenders can register, access the online app without charge in minutes, and receive a fully functional, custom mobile app in just 7 weeks. When lenders sign up, the buy-now-pay-later (BNPL) module is also made immediately available to them.

Additionally, Lendsqr is collaborating with a number of platforms so that the loans provided by Lendsqr’s lenders can be distributed via API. This way, lenders are able to adequately scale their business without breaking the bank to attain visibility through marketing.

Beyond technology, Lendsqr provides lenders with solutions that lower their cost of borrowing and actively supports their expansion. Lenders can take advantage of on-lending facilities offered by Lendsqr’s partners who can give them the funds to lend with. SaaS systems that offer back office capabilities, like Freshworks’ chat and helpdesk solutions which help lenders satisfy the particular requirements of customer support in a lending organization are also available on Lendsqr. Lenders can access the best products on Freshworks with a software credit worth up to $10,000.

The A1 Credit x Lendsqr experience

A1 Credit contracted Lendsqr from the start of the execution phase and since then, both teams have closely collaborated on ideas from inception all the way through to the product launch. The Lendsqr team has loved working with A1 Credit and is happy to have contributed to the development of their cutting-edge lending solutions. Grace Effiom, Head of Growth at Lendsqr stated that “The dedication of the A1 Credit team through the entire process fell nothing short of admirable. It was indeed a joy working with a team of individuals passionate about providing credit while we focused on developing a state-of-the-art platform to cater to their lending”.

With Lendsqr’s services, A1 Credit is now able to provide loans to Nigerians with reasonable rates and terms while keeping problematic borrowers out of their system. Lendsqr ensures A1 Credit only provides financial assistance to honest Nigerians with urgent needs by filtering out problematic borrowers. Additionally, Lendsqr offers partial-debit and auto-debit solutions to streamline loan recovery for A1 Credit in case of missed repayments.

Lendsqr continues to offer the required technology, support, skill and expertise to achieve a stress-free lending experience for the A1 Credit team and by extension, their customers. A1 Credit’s vision to amass a huge customer base is already unfolding in real time. In the first week that the app went live, it garnered over 800 users without any marketing efforts. The team is confident that this is an indicator of the success that lies ahead and that this will quadruple and continually multiply in the coming months.