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Lender case study
September 27, 2022
Nigeria’s untapped consumer credit needs currently stands at about N109 trillion. While individuals and MSMEs in certain more developed economies are able to turn to the banks to fulfill their credit needs, the reality of accessing credit from banks for the average Nigerian is quite bleak. Out of a total adult population of over 60 million, just about 40% are banked and and even more alarming is that only about 2% of the total adult population have successfully gotten loans through the banks. This does not imply that Nigerians do not take loans; the majority of Nigerians borrow from informal lenders, family and friends. This is largely not an issue of preferred lending sources but rather indicative of their inability to access credit through the formal financial institutions.
The risk averse nature of banks gives way to an unwillingness to ride the wave of consumer lending as effectively as they should be able to even with the abundance of financial data they generate on a daily basis. Undoubtedly, consumer lending is indeed high risk, especially since Nigerians do not have the best track record of paying back loans. Banks are cautious not to further increase their non-performing loans (NPL) ratio. Although a few banks have ventured into the business of providing consumer credit, this has done little to bridge the credit gap considering the conditions for securing these loans tend to be stringent and with high interest rates. The rigid know-your-customer (KYC) process and the need to secure these loans with collateral present a high barrier to accessing these loans as very few Nigerians meet the requirements. The banks are unable to do away with these criteria as they take into consideration the potentially high risk of default. It has been more profitable for banks to lend to corporate bodies and high net worth individuals than to provide loans to the common man.
Unfortunately, this approach to lending common with the traditional lenders means the larger informal market credit needs remain underserved. This is where digital lenders like Urgent 10k come in to fill the gaps. While banks have proven to be inflexible in their approach to consumer credit, digital lenders like Urgent 10k are more agile; making use of algorithms and data to underpin their lending decisions. They are constantly trying to leverage data to make better informed lending decisions while operating off a Lending-as-a-Service (LaaS) platform like Lendsqr that makes it possible for lenders to assess loan applications and borrowers in seconds with up to thousands of data points. This makes all the difference in consumer credit and provides access to affordable credit for the average Nigerian. This is done without the stringent conditions of traditional lenders but with arguably even more accurate representation of their creditworthiness that allows lenders to lend more confidently.
Photo by Opeyemi Adisa on Unsplash
Urgent 10k is a digital lending business which as the name connotes, provides borrowers quick access to micro loans; typically between N10,000 and N100,000. Four smart professionals, the founders: Bankole Akinwunmi, Olumide Sangobiyi, Olamide Olaleye and a non-executive director, with extensive experience across technology, banking and retail saw an opportunity to apply their combined industry knowledge to lending. The founders, through a deep understanding of the pitfalls of the traditional consumer lending model, designed Urgent 10k’s solutions around a modern approach to lending which relies heavily on the use of data and technology to lend effectively and safely.
Urgent 10k launched fully in late 2021 and it has set out to be the leading lending app, created with the intention to make borrowing easier. Borrowers are able to offer quick loans at competitive rates and reasonable tenors; essentially catering to the everyday Nigerian with credit needs that cannot be satisfied by traditional financial institutions.
Urgent10k has set its sights on growing its customer base to over 200,000 users; and it will get there soon. The ultimate objective, though, is for Urgent10k to be the smart lending app which Nigerians can turn to in their times of need, 24/7 rain or shine.
Despite having prior experience in finance, digital lending was green and unexplored terrain for the founders of Urgent 10k but one thing they were certain of, was that they wanted nothing short of the best when it came to executing their business model. They embarked on this journey, and did quite a bit of “shopping around” in a quest to find the best technology talents with the required expertise; the caveat being that the journey to launch should not break the bank.
The team encountered some challenges pursuing this option to build, however, they knew lending-as-a-service providers existed that could build and support their entire lending business; with a platform Urgent 10k could operate from. The Urgent 10k team discovered Lendsqr through a recommendation and they have not looked back since. “We listened to the Lendsqr team and what they had to offer and made the decision to go with them. After carefully considering all aspects, including funding and cost, Lendsqr made the most sense”, says Olumide Sangobiyi, co-founder of Urgent 10k. The team was convinced that they had checked the boxes of selecting an expert and cost effective lending solution.
What exactly did Lendsqr offer that caught the attention of these seasoned professionals? What is it about Lendsqr that gave them the confidence to entrust them with the entire business system?
Lendsqr is a Lending-as-a-Service (LaaS) ecosystem that helps lenders to launch, and scale their digital lending across multiple channels, at the lowest cost, with an endlessly configurable loan decisioning system. Lenders who run off Lendsqr get access to a sustainable and holistic 100% cloud-based lending stack which includes a management console that allows them to manage their entire lending business and automate the credit lifecycle from loan origination to collection and recovery. Lenders who already have their own technologies can also take advantage of Lendsqr’s APIs to enhance their lending experience. These APIs include a blacklist engine to block bad borrowers and access to Lendsqr’s fast growing data ecosystem.
In addition to custom credit scoring with multiple modules and security features to thwart bad borrowers and fraudsters, Lendsqr is also equipped with integrations with some of the best payments and data providers as well as credit bureaus. Payment providers like Paystack, Mono, Remita, Monnify, Woven Finance, Cgate are already embedded right out of the box. The goal is to provide lenders with robust ecosystem data and deep insights that cannot be accessed anywhere else. This helps lenders make better lending decisions all round.
Lenders can also scale their business via the multiple loan distribution channels Lendsqr offers custom mobile app (Android and iOS), web app and loans via USSD. It typically takes about six months to one year for lenders who can afford the technology to scale, to launch a viable product. However, this is not the case on Lendsqr. Lenders can sign up and start using the web app for free within 5 minutes and get a fully functional custom mobile app within 7 weeks. The buy-now-pay-later (BNPL) module is also made instantly available to lenders at sign up. Lendsqr understands that time is indeed money when it comes to lending.
Beyond the technology, Lendsqr offers solutions that reduce the cost of lending for lenders and actively creates opportunities that foster their growth. Lendsqr’s partnership with some of the best data providers avails lenders on the platform with up to 50% discounts for quality data to adequately assess loan applications. Lenders even have access to a wide spectrum of data for free. The partnerships lenders can benefit from also extends to onlenders who can provide lenders with the capital to give out loans, quality Software-as-a-Service (SaaS) platforms which provide back office tools such as Freshworks’ chat and helpdesk solutions to enable lenders meet the unique demands of customer support in a lending business. Lenders enjoy up to $10,000 worth of software credit to access the best tools on Freshworks.
Marketing costs can make up a significant portion of lenders’ costs. Consequently, Lendsqr is partnering with multiple platforms where Lendsqr’s lenders’ loans are embedded within those ecosystems via API distribution. Prospective borrowers can request loans from these other platforms which are routed directly to these lenders to underwrite. Lenders get the chance to grow without spending on fancy marketing.
The founders of Urgent 10k engaged Lendsqr’s services from the on-set and so both teams have worked together intimately from ideation to launching to the market. “The issues we have had since inception till date have been handled quite professionally by Lendsqr. We’ve had a dedicated support team from Lendsqr that is very hands-on and works closely with our in-house team to help us manage all issues promptly and efficiently and drive Urgent 10k’s growth ” ,says Bankole Akinwunmi, another one of the founders of Urgent 10k.
The Lendsqr team has equally enjoyed the ride with Urgent 10k and are glad to have played and continue to play a significant role in the success of their innovative lending solutions. “We found the digital lending aspirations of the Urgent 10k founders deep and emotional. And we could not but help them on the journey to launch. Luckily, the Lendsqr LaaS platform allows lenders to focus on lending while we provide the tech and data stack for them to launch fast and well”, says Grace Effiom who heads the Growth team at Lendsqr.
Urgent 10k now offers quick loans to Nigerians who need financial assistance at reasonable rates and durations and with Lendsqr’s lending stack, are able to prevent bad borrowers from gaining entry into their system. This way, Lendsqr ensures that Urgent 10k only provides financial aid to Nigerians who are actually willing to pay back to meet their urgent cash needs. Lendsqr also implemented the auto-debit and partial-debit solution that we implemented for Urgent 10k which allows the team to recover funds when customers do not repay their loans as at when due. Adedeji Olowe, Founder of Lendsqr shares that “With Urgent 10k, we fulfilled our promise of helping smaller lenders launch at scale, at blistering speed, and without bankrupting them in the process”.
All in all, Lendsqr provides the technical, training and advisory support that guarantees a seamless customer experience for the borrowers on Urgent 10k’s network and the security Urgent 10k needs to lend confidently and at scale.
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