Hi, Ngozi Dozie co-founder of One Credit. Interested in discussions on providing credit to Nigerians in al social-economic classes and improving literacy on the power of credit. You can learn more about us at one-cred.com and we are building a fin-tech hub (all ideas welcome) in VI (cre8.work). Very keen to meet all fin-tech players in all shapes & sizes - the market needs all the help we can collectively provide!
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when you say fintech, are you talking the typical “payments” startups, or proper all round Fintech here?
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All round fintech - alternative currencies, insurance, wealth management. Payments yes but its but one part of the eco-system.
I am not in fin tech but its a smart idea. Except that I tend to think that assessing risk in Nigeria based solely on salary is dangerous. The worst credit risks in Nigeria tend to be high salaried employees and especially bankers and civil servants. But microloans would have a lot of promise in building a more important consumer profile and credit history database.
Why can’t I get a loan to be paid back in more than a year
Nice to meet you @ngozidozie
I’m interested in creating tools for secure and cheap micropayments.
We don’t look at salary alone - in fact in some cases we give loans without even asking for salaries. But agree with you on the power of microns in building credit histories.
Our funds are short term so our loans have to be short term.
So what do you look at? How do you deal with default?
I love it! If only we had a centralized credit monitoring system (Think FICO’s using SSN in the us).
My questions are:
- How will you monitor individual risk from person to person?
- Your interest rates are quiet high even for “semi-secured” loans and reason for this and do your rates change from person to person?
- Have you thought of a risk sharing eco-system. i.e where people can fund loans especially micro loans, instead of one-credit using it direct capital?
I’m all about fintech in Africa!
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From one-cred website:
- Can I pay down my outstanding loan before the end of the loan?
Yes, however early settlement does not attract discounts on the interest charge, this means
that full interest repayment will be required.
Common @ngozidozie - I don’t agree with this part, because this can lead to predatory lending. A pre-payment penalty YES, but requiring full payment of interest regardless of early payment will make any smart person not pay the loan even when they have the cash to do so.
I do understand you want more interest payment to cover your underwriting cost but the smarter thing might be to have a prepayment penalty which is stated upfront, because going by your current way, people won’t prepay when they have the funds to do so, and it actually increases your default rate (but that’s a different discussion for another day. I know this because this is all I do day in day out - building complex credit models).
Will the prepayment penalty be significantly lower than the interest? Why will you be punishing me for repaying my loan earlier than agreed, doesn’t sound right
Exactly why i was suggesting a prepayment penalty (with the aim that the penalty it is “very” significantly lower).
My understanding from what they have is: say you borrow N100,000 for 1 year and you are supposed to pay back say N150,000 with the extra N50k accounting for interest. If tomorrow (1day after I take the N100k loan) i get some money and will like to payoff the loan, I still have to pay N150k even though I have not even accrued 1 full day of interest.
So for anyone with a brain, even if they had the money to pay the full loan today, i won’t because that will be N50k wasted, instead I will hold it till then end. If the prepayment penalty was much smaller, say N5K then I might not mind and just pay it off and take the penalty.
Much overdue. Interested in contributing. Fintech is my space and working on some ideas to solve some of the challenges in payments and financial products.
What are your plans for the Fintech hub? How do you see it becoming better organized?
full disclosure: I have been a non-exec director with Splash Mobile Money in Sierra Leone for the last 4 years.
Working on something and I will say shortly (still in stealth mood) but it will be very interesting. I see fintech becoming more organized, of course a lot of it depends on the big gorilla in the room “Payments” as a whole working, more specifically payment processing, I’m not talking mobile money etc. I personally am in touch with people trying to fix payments but I am not working on anything in the payment space. I believe it will be hard to truly disrupt payments (i.e nothing new, just a fix to an existing problem). Don’t get me wrong, payments needs to be fixed - there are just some invisible forces (insert company/government names here) working against this fix.
My two cents: fintech startups need to bond together as they are going against some serious forces (think: banks, governments and blockhead regulators living in the past), but unfortunately you can’t stop innovation, so I am very confident this space will thrive.
Also interest in helping out with the fintech hub when it goes live.