In a recent report by the International Finance Corporation (IFC) and the Central Bank of Nigeria (CBN), less than a third of MSMEs have successfully obtained loans from financial institutions, and that is not for a lack of trying.
Nigeria currently has over 35 million MSMEs and if approximately only 10 million MSMEs have been able to get loans from financial institutions, hence, a credit gap of about 25 million in the country.
Fint, an online peer to peer lending platform intends to simplify access to credit for genuine borrowers while also providing returns to lenders.
Nairametrics was at FINT’s new office in Ikoyi during the week where we had a chat with the CEO, Mr. Chiwete John-Njokanma. Excerpt:
What exactly is FINT?
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FINT is an online lending marketplace, basically we connect verifiable income borrowers looking for access to affordable credit with lenders who are looking to fund the loans for attractive returns. We have consumer loans i.e. loans between N60,000 and N2 million at rates as low as 8% for 3 – 12 months, with retail and institutional lenders (banks and asset managers).
For lenders, they can lend in the multiples of N20,000 grows at 26-39% for one-year loan tenures, for 6 months 15-22% for 3 months it is 8-14%.
What is the success story so far?
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Our first story is the fact that we launch and became an acceptable product to the public (Lagos) and the most interesting thing is that there is a huge demand for this product for two reasons, one is because investors are looking for good returns for their money while borrowers are looking for ease and quick access to borrow money and that is the problem we are solving.
This offering has made our platform interesting. We currently have 26,000 customer base and average borrowings is like N333,000.
How do you get these lenders?
On the retail side, our strategy is the social media platforms, (twitter, facebook and Instagram) while on institution and HNIs they are mostly offline activities meeting clients and try to access their funds.
Does FINT have footprint outside Lagos?
Currently we are only in Lagos, however, we are pursuing a new licensee that will allow us to expand and move our operations to other states. But importantly, Lagos is a big market, with an estimated population of 22 million and about 60% of this population falls into our target market.
How can borrower access your platform?
So for a borrower simply sign on to our website www.fint.ng and risk assessed by our arithmetic algorithm if you pass the risk assessment test, you will get a score, that score is tied to a particular interest rate and you agree to borrow for certain period of time, risk and interest rate provided, upload proof of ID, statement of accounts at least 6 months.
Once this is done, your loan is made visible on the platform for lenders to invest. Lenders would have selected their risk criteria already, based on their risk appetite as little N20,000.
How do you handle loan defaulters knowing fully that some might want to run away after collecting the loan?
We have not experienced any default on our platform so everyone has paid back. We had people who have paid late, but they ended up paying back. The truth is that the average Nigerian is not trying to scam or cheat the system, that’s a view we hold in this business. Also, loans on FINT are insured against loss of work, permanent disability or death. So if you lend to someone who passes away, you don’t need to follow them to the great beyond to get your money back.
More importantly for us, is to create a system for genuine borrowers willing to pay back, hence, we partnered with the credit bureaus, we also carry out verification services through our third-party partners so that they can verify that if the residential address given is correct also the introduction of BVN into the system has enabled us to know our customers directly.
How secure is your platform?
Our platform is as secured as any mobile banking application and we have the necessary securities certifications and encryption system.
There has been an upsurge in the number offintech startups in the country, what is the edge for your platform?
We presently don’t have any direct competition, however, there are a lot of strong startups out there. At FINT, our value proposition is the ability to merge value for both sides of the food chain.
A lot of lenders in the ecosystem presently lend to borrowers on their own balance sheet, hence they charge high-interest rate and get high returns but there is another side that is missing that is the investors, there are many people looking to earn income passively rather than take a second job to earn more money. Lenders willing to lend and earn strong returns.
How do you determine returns?
Our pricing model changes and is based on Monetary Policy Rate (MPR), inflation rate and based on how these two mechanism work we can work out beneficial returns for lenders.
Have you raised any funding?
Yes, we have locally from strong financial institutions.
Are you happy with the rate genuine borrowers get access to loans in Nigeria?
No, and it is unfortunate, in 2014 it was about 5%, in 2017 it dropped to 3%, it means only 3% of them have had access to credit facility from financial institutions. But why is this so? It is because the way the current system is set up will not encourage a retail investor to borrow.
What is your latest product on the market?
We have the employment model product where we allow companies to partner with us for staff loans while we directly deduct from their salary and give the loans at a lower rate