Tag: FinTech

  • Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    The landscape of digital lending in Nigeria is undergoing a dramatic transformation, with the number of approved loan app soaring to 380 this February, a significant jump from 320 in October of the previous year. This surge, reflecting approvals from both the Federal Competition and Consumer Protection Commission (FCCPC) and licenses granted by the Central Bank of Nigeria (CBN), signals a burgeoning appetite for accessible financial services. However, this growth is shadowed by a rising tide of consumer apprehension regarding the operational ethics of some digital lenders.

    According to the FCCPC’s database, a substantial 322 digital lenders have received full approval, while 42 operate with conditional approval. Additionally, 16 companies are licensed by the CBN, culminating in the 380 approved entities. While this expansion suggests increased financial inclusion, it also raises critical questions about regulatory oversight and consumer protection.

    “It is not enough to issue a licence or grant approval based on the fact that they have met certain conditions set by the FCCPC, the regulator needs to monitor these lenders and ensure that they are operating in ethical ways, especially how they disburse loans and how they recover their loans,” stated Mr. Gbolagunte Ajayi, a financial analyst. His words underscore a growing sentiment that regulatory action must extend beyond mere registration to encompass active policing of lending practices.

    Consumer Experiences: A Growing Sense of Unease

    The concerns voiced by consumers are not merely abstract fears. They reflect real-life experiences, often laden with emotional distress. My chats with a few people regarding the saving capabilities of these loan apps tended to view them as a trap rather than a saviour.

    Omowunmi revealed that she obtained a loan from a well-known vendor out of an urgent need. She voiced her displeasure with the time element and interest rate. “I was offered N44,000 to refund N76, ooo over a two-month period,” she said. This ran counter to the advertisement that said I might receive N100,000 and repay N100,400 over three months. Kemi herself expressed dissatisfaction about the unwanted messages and calls she received from the agent urging her to take out a loan in order to obtain a reduced interest rate.

    Read Also: Nigerian Students Get Two-Year Grace Period for Student Loan Repayment

    Daniel bemoaned the automated calls that occur when a loan default occurs. “Do they think I will be forced to pay for all the calls? I receive up to 35 calls every day telling me to pay. When I phoned their centre to report that my device had a problem and I was unable to access my account to make a payment, the representative asked me to borrow a device, log into my account, and make the payment. She then provided her account information to complete the payment, but regrettably, it was unsuccessful. When the loan was past due, I received forty calls from a machine.”

    These narratives paint a picture of a sector where the lines between legitimate lending and predatory practices blur. The use of harassment and threats, reminiscent of unregulated “loan sharks,” by some licensed apps further exacerbates consumer anxiety. This raises a critical question: how can regulators ensure that the benefits of digital lending, such as increased financial access, are not overshadowed by unethical practices that exploit vulnerable individuals?

    Regulatory Response and Economic Implications

    The FCCPC acknowledges the challenges and has taken steps to address them. Adamu Abdulahi, Executive Commissioner of Operations at the FCCPC, emphasised the commission’s efforts to identify and hold loan app operators accountable through its Interim Regulation. He also mentioned that 47 loan apps have been delisted from the Google Play Store, and 88 are under close watch. “The main aim of the registration and approval of digital lenders in the country is to identify the companies behind the apps through its Interim Regulation to be able to hold them responsible for any infraction,” he clarified.

    Despite the challenges, the FCCPC recognises the vital role loan apps play in the Nigerian economy. These platforms offer crucial financial services to individuals who may be excluded from traditional banking systems, contributing to financial inclusion. However, a balance must be struck between fostering innovation and safeguarding consumer rights.

    The rapid expansion of the digital lending sector necessitates a robust regulatory framework that not only approves lenders but also actively monitors their operations. As we navigate this evolving financial landscape, it is imperative that consumer protection remains at the forefront, ensuring that the promise of accessible finance does not come at the cost of ethical integrity.

  • Sawport Video Banking, Sproutly Make Finals Of Ecobank Fintech Challenge In Togo

    Sawport Video Banking, Sproutly Make Finals Of Ecobank Fintech Challenge In Togo

    By Edu Abade

    Two Nigerian financial technology firms (Fintechs), Sawport Video Banking and Sproutly have made it to the Grand Finale of Ecobank Fintech Challenge, scheduled for 27 September 27, 2024 at the Ecobank Pan-African Centre in Lomé, Togo.

    The 12 finalists were selected from a highly competitive cohort of 40 Fintechs that made it to the semi-finals of the competition.

    This year’s challenge attracted over 1,550 applications from 70 countries within and outside Africa. It would be recalled that nine (9) Nigerian Fintechs qualified for the semifinal stage and the finalists were announced at the inaugural 2024 Ecobank Fintech Challenge Hybrid Semi-Final event held last week at the Ecobank Pan African Centre in Lagos, Nigeria.

    Sawport Video Banking, one of the Nigerian Fintech finalists is a video banking solution that serves as a virtual branch for financial institutions to deliver seamless customer service and accelerate financial inclusion.

    It is a digital platform embedded with an alternative credit scoring algorithm designed to enable smallholder farmers to transact, enjoy micro-savings, access micro-loans and contribute to micro-insurance in their informal social savings groups.

    Sproutly on the other hand, provides comprehensive financial management, flexible credit packages, and advanced payment solutions for schools, students, and families, ensuring financial stability, ease of transactions and enhanced financial literacy.

    Speaking, Managing Director and Regional Executive, Ecobank Nigeria, Bolaji Lawal congratulated the Nigerian fintechs on making it to the semi and final stages, saying: “Your hard work, creativity, and innovative solutions have brought you this far, and we are excited to see what your solutions present. Remember, your journey in this Challenge is just beginning and we at Ecobank are committed to supporting you every step of the way.

    “Nigeria’s enterprising and innovative youths in fintech have benefitted from and contributed to the Ecobank Fintech Challenge. It is no coincidence that Nigeria is hosting this event. Our nation has emerged as a fintech hub in Africa, consistently leading in the number of applications, finalists, and winners over the years in the Ecobank Fintech Challenge.

    “This year is no exception, with nine of the semi-finalists hailing from Nigeria. This achievement underscores the vibrant and innovative fintech ecosystem we have cultivated here.”

    While wishing the two Nigerian Fintechs success at the final stage, Lawal restated that Ecobank Nigeria remain fully committed to working with the Ecobank Group to provide market access to the innovative solutions that emerge from the challenge, stressing that the collaboration between traditional banks and fintechs can create a more inclusive, efficient and robust financial ecosystem for all Africans.

    The Ecobank Fintech Challenge, a flagship initiative of the Ecobank Group, organized for seven years, continues to serve as a premier continental platform for promoting innovation and collaboration between fintechs and the pan-African Bank’s cross-border markets spanning 35 countries.

    The challenge remains a significant event, attracting key players within the fintech ecosystem and beyond. It provides a unique opportunity for fintech entrepreneurs to address challenges such as reaching scale, navigating an uncertain regulatory environment, and managing scarcity of funding.

    In addition to financial rewards, the challenge offers Ecobank’s expertise in diversified market operations and the right solutions to scale across its pan-African footprint and international presence. Since inception, 60 fintech startups have been inducted into the Ecobank Fintech Fellowship.