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Who are the real money lenders; The Telecommunications or The Banks?

On our way for another meeting, Biyi asked the question again, “Who is the real money lender?” which struck yet another cord in me. I could vividly remember when Airtel started lending their customers airtime, it came at first as a magic of the millennium as this became a reality in Nigeria. I was truly amazed and I clapped for the success of this idea.You can't but applaud the Business development units that came up with such a great idea.

There are no doubts that, lots of intelligence would have gone into achieving this. As at the last time I borrowed airtime from Airtel, even till now, their algorithm determines how much you can borrow. It is interesting to know that if you don't have any record of card top ups you would hardly qualify to borrow an airtime from them. Other Telcos embraced this idea, add their bits and pieces to make a cynosure product.

However, I recently stumbled on a new tab in my banking platform (a Corporate account I have maintained with them since 2009, with different sorts of heavy transactions) that says “Investment and Loans” and you can guess what flashed through my mind. It looks more like another dawn of ground breaking innovation in the banking industry and I was ready to be the first whistle blower. Alas, I couldn't do anything with the tab, it was probably a tab to manage established investment and loans from the bank. Filled with a bit of disappointment, I continued scrolling done to have a feel of new improvement on the platform then I saw “Salary Advance” and I said to myself, “this is probably where it should be hiding”. Under this tab is another long story in red, it is another stereotyped approach of requesting for loan. Now, I finally got my curiosity quenched with no new surprises. I have tried asking around and I have also made some few calls, I have not heard of any Bank with a model of lending their Customers money based on their records and transaction patterns.

With the number of innovative things I have noticed in the Telecommunications industry, I think Banks (both Micro Finance and Commercial Banks) are still learners and they have a long way to go. I am so sure many Bankers would argue that their challenges, scenarios and fears are not the same, and that, both industries are wide apart. They would argue about how you need to be sure no one runs away with peoples' money and so on. Then they would bring up a Risk personnel that would tell you how lending N2,000 to 100 people, if there is a default, would amount to N200,000. The story goes on and on. Nature inspires so many inventions, these are two different terrains but inventors find the joining line. It is best, things seem to go beyond their current state and capability. This would bring a whole new horizon to explore.

The same way you argue your fear, I would argue Nigeria is the level playing ground for all Companies and the fight to get your share of customer loyalty gets dirtier as Company survival is more important. Intelligent credit facility has been proved to be possible by the Telecommunications Companies, why would the Banks not get their research material and implement it to suit its business needs. Technology has brought in a new level of abstraction for business decision. Banks should be able to use customers' data available to them beyond annual financial report. It is time for them to roll their sleeves and do the real job. Get your business people to create the model, let the Risk people calculate the risk and suggest a model with minimal risk(aside from saying it is better not implemented) and get the IT people flesh this out. The whole world is talking about Artificial intelligence, Machine learning and so on. Where are Nigerian banks on this map of thorough use of Technology to change banking in Nigeria? If the model works for the Telcos it will definitely work for the Banks.

This does not apply to banks only, all industries can benefit from it. The world run on credit, it is the golden hand cuff for Customers. Put in place a good model that determines how much credit facility you can give your customers based on their transaction history or pattern. This makes customers want to do more by getting higher credit facility and also maintain their integrity to continue to have such facility. The maximum I can now borrow from Airtel is N2,000. “Airtel Lenders' Club” You know what this means. You would agree with me that, “that singular innovation from Airtel saves a million times from embarrassment”. It is good I let you know that I have never borrowed any kobo from any bank, even the bank I bank with. If the story is not, “you must have done transaction worth million in a month”, it would be “we are not currently giving out loans”. The process of application and getting loans from banks is so foul proof that it can easily be manipulated. Hence, there should be little wonder why many of their loans go bad.

It is against this backdrop that I take the stand that the Telecommunications Companies are the current real lenders and they have been saving lives since 1759...Lol. We will patiently wait for our Banks to brace up to the challenge. I pray they get to read this, I want to see the first Bank to implement it. Such would get a big applaud from me.


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