Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Business News

Victor Asemota believes some digital lending platforms will fail 

Emmanuel Abara Benson by Emmanuel Abara Benson
January 15, 2020
in Business News, Tech News
Victor Asemota believes some digital lending platforms will fail
Share on FacebookShare on TwitterShare on Linkedin

Popular techpreneur, Victor Asemota, said he believes that most centralised and algorithm-based digital lending platforms in Africa are going to fail.

This is obviously an outrageous prediction, which will not sit well with fintech companies that engage in the business of lending. However, before we conclude whether Asemota is right or wrong, let us first understand his point of view.

Asemota’s position: In a series of tweets, the Ghana-based Nigerian tech professional talked about lending in general, and why he believes some people are going about it the wrong way.

RelatedPosts

Tech investor, Victor Asemota debunks Tinubu’s claim of bringing ECONET to Nigeria 

Why Nigeria needs more than 144 fintechs – Adetola Onayemi, Norebase CEO

[READ ALSO: Binomo plans big for Nigeria and African market with Victor Moses deal(Opens in a new browser tab)]

According to him, there are two things that must be incorporated when starting a lending platform: a wide distribution channel and a viable product/service that can be leveraged on to make secondary profits.

News continues after this ad


Before you think of going into commercial lending, ask yourself two questions:

1. Do we have distribution?

2. Do we have a product to make secondary profits from?

The future of banking in Africa is also going to depend on those two. This is where telco is very strong.

— Victor Asemota (@asemota) January 15, 2020

Offering further explanations, Asemota said that the best way to be successful as a digital lender is by finding ways to channel borrowers to spend the money they have borrowed on products/services owned wholly or partly by the lender. This does not only guarantee additional profit for the lender but also helps to minimise the risks associated with lending.

If I lend money to a person and the person uses the same cash to buy a product from me where I make profit, I have earned twice. This double earning reduces overall risk for me as a lender even when some defaults inevitably happen. This is why airtime lending was first to grow.

— Victor Asemota (@asemota) January 15, 2020

News continues after this ad


Many digital lending platforms across Africa have not yet figured out this secret, let alone implement it. Asemota said he once tried to find out whether digital lenders know what exactly their customers spend their loan money on. According to him, many of the lenders mentioned products/services that are offered by third parties; meaning that these lenders do not earn profits from any of these products.

[READ MORE: This simple advice could help solve your investment challenges)

It is, therefore, because some of these digital platforms have not figured out this important model that Asemota believes that “most centralized models based only on algorithms will fail”.

I have asked some African digital lenders if they know where the money they lend to people is being used? A lot of them mention products that they don’t also sell or have any agency to sell. This is why I believe that most centralized models based only on algorithms will fail.

— Victor Asemota (@asemota) January 15, 2020

Indeed, there should be more to digital lending than just making use of the internet. In order to compete against traditional lenders such as LAPO Microfinance Bank, digital lenders must master the points highlighted by Asemota.

LAPO is the biggest MFB in Nigeria. You don’t want to mess with their loan officers if you borrow from them. They have remained quietly viable without online distribution. I keep telling people that the Internet is NOT their distribution platform in most of Africa. Study LAPO.

— Victor Asemota (@asemota) January 15, 2020

Do you agree with Victor Asemota? We’d like to hear from you.

Related

Tags: digital lending platformsFintech companiesVictor Asemota

Comments 2

  1. Kay bee says:
    January 16, 2020 at 8:20 pm

    Let’s we forget, LAPO began its competition against the Big Banks so I believe online Lenders will and are gaining traction but as is the case in the Loan business at all levels, they would need a strong recovery team more like a taskforce to go after defaulters.

    Reply
  2. Hazan says:
    January 29, 2020 at 6:35 am

    Brilliant idea, absolutely correct.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • NGX closes negative with the market cap down by N20 billion 
    • FG asks students to sue ASUU over strike, insists lecturers won’t be paid during the period
    • Hackers exploiting stolen cookies to attack corporate organisations – Report

    Follow us on social media:

    Recent News

    Weekly Stock Update: Nigerian local bourse’s ASI depreciates by 0.22% w-o-w

    NGX closes negative with the market cap down by N20 billion 

    August 18, 2022
    FG to review January 18 resumption date for schools across the country

    FG asks students to sue ASUU over strike, insists lecturers won’t be paid during the period

    August 18, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com