Customer-Centric Approaches to Lending: Tailoring Services for Nigerian Borrowers
Nothing beats the happiness and satisfaction customers get when they find services that precisely address their needs. Interestingly, with the rapid technological expansion we are witnessing today, stakeholders are inspired to find ways to create tailored services, with lending being one of the key industries garnering such attention. While lenders have managed to resolve in some way and provide tech-aided resolutions to the question “Who is qualified for a loan?’’ many are currently still faced with the questions of ‘’What kind of loan is needed?’’ and ‘’How do one find precise ecosystems where borrowers with these needs exist?’’
McKinsey and Company in an attempt to provide a data-based answer to this, curated a fascinating customer survey, with 70 per cent of the surveyed customers admitting their preference for personalised services. In this post, we will offer comprehensive insight into what opportunities exist for a Nigerian lender looking to offer personalised loans and the impact on the lending landscape.
Before we begin, let’s talk about Personalised Loans
The most balanced way to see personalised loans is to consider them a perfect answer to the credit needs of a borrower. For many borrowers, the trigger to take a loan is to cater to a specific desire. This means the purchasing power is higher if the product directly speaks to resolving that particular problem. What then seems to create a bit of a challenge here is that expenses, wants and financial needs are spontaneous and often arise sporadically. Hence, finding a one-size-fits-all formula for the exact kind of loan a borrower needs might then seem slightly unrealistic. So, where lies the magic in determining this?
Today, many lenders leverage AI and algorithms to determine consumers' wants and the triggers for adopting loan offers. With supervised AI being the most relevant to digital lending, a lender can easily piece together trails of a customer’s e-commerce site activity, queries for a student loan, terms and durations, and with that, can stamp correctly, the customer's needs in real-time, essentially telling the customer “We know you need credit for your school fees, we’ve got you!” Likewise providing loan products that cater to specific pain points like healthcare, utility bills, asset finance, and so on.
What is most interesting is tailoring these personalised loans directly to a community of borrowers that need it, offering them in an instant, the exact kind of loans they need. Imagine being able to reach thousands of your target market in one stretch. This is what we refer to as ecosystem lending. This is the best step in what constitutes the ultimate goal of creating personalised lending experiences or loan options for borrowers, with digitisation, making this an even easier and enthralling quest.
How Does Ecosystem Lending Work?
Ecosystem lending in itself presents lenders with the opportunity to lend with a goal. Today, many lenders have curved their solutions around what ecosystem they serve and the impact they hope to drive through this process.
Ecosystem lending gives access to a community of people with similar credit needs, be it for education, agriculture or funding for travel, and meeting the varying degrees of loan requests of these kinds. Several borrowers in Nigeria today have common loan interest to scale their agro-business and equip their schools with cutting-edge technology, as well as others with credit needs for routine health checkups, wellness or fitness. This creates a unique pattern called customer segments. Ecosystem lending in light of this pattern, naturally leverages these customer segments and their sources, to embed credit into them. The opportunities this presents for a lender looking at offering personalised loans are innumerable. Our next interest is answering the quintessential question ‘’why should lenders create personalised loans?’’
Why Nigerian Lenders Need to Start Creating Personalised Loans
- Enhanced Customer Loyalty: As you’ve noticed, over the years, digital services generally are more prompted to follow consumer preferences, and demand for personalisation is boxing through the veil of just any kind of service. The 2023 state of personalisation report delivered feedback, with 62 % of customers submitting that they won’t stay committed to a brand that does not provide a personalised experience. Lenders that offer personalised loans in this light, tend to build stronger relationships with their borrowers. When borrowers feel that their unique needs are being met, they are more likely to remain loyal to the lender and potentially seek additional financial products and services.
- Data-Driven Decision Making: Personalised loans rely heavily on data analysis and insights. By leveraging real-time data from each ecosystem source, lenders can make data-driven decisions that lead to more profitable lending practices, increased efficiency, and better customer experiences. What lies at the end here is customer satisfaction and returned patronage!
- Cross-Selling Opportunities: When lenders have a deep understanding of their borrowers’ financial profiles through personalised loans, they can identify opportunities for cross-selling other financial products, such as insurance, savings accounts, or investment opportunities, further increasing their revenue streams.
- Adaptation to Regulatory Changes: Regulatory Requirements in the financial industry constantly evolve. Personalised loans, with their emphasis on tailored lending practices, can help lenders adapt to changing regulations more effectively by incorporating compliance measures into their loan customisation processes.
- Positive Brand Image: Lenders that offer personalised loans are generally seen as customer-centric and innovative. This positive image can attract more borrowers, investors, and stakeholders, enhancing the lender’s reputation within the industry.
- Long-Term Sustainability: By aligning their lending practices with borrowers’ unique needs, lenders can build a sustainable and resilient portfolio of loans. This approach helps them weather economic downturns and market fluctuations more effectively.
- Improved Credit Risk Assessment: Even without Artificial Intelligence, personalised loans are less cumbersome to deal with than traditional loans due to their precise nature. As a lender, with personalised loans, you can conduct more thorough assessments of your borrowers, including their creditworthiness and financial stability. This enhanced scrutiny leads to better-informed lending decisions and reduces the likelihood of lending to high-risk individuals or businesses.
- Reduced Non-Performing Loans: Personalised loans can help reduce non-performing loans (NPLs) by improving the overall credit risk assessment process and increasing borrower accountability. Lenders can match borrowers with loan products that suit their financial capacity. This, in turn, reduces the incidence of non-performing loans, minimising financial losses for the lender and preserving the lender’s overall financial health.
How VeendHQ is Pioneering Customer-Centric Lending Today
Being one of the top industry leaders and experts in democratised lending, our core operation has always been concerned with finding novel ways to plug in credit seamlessly and make loans accessible to deserving individuals. We have essentially helped lenders on our platform answer the “who is qualified for the loan’’ question, and “what kind of loans do they need?’’ Here is how we did it:
I. We introduced ecosystem lending: As an institution operating in Nigeria pioneering credit and realising that the broad borrower demography can be leveraged to create very feasible customer segmentation, we have created lending segments we call ‘’markets,’’ providing lenders multi-channel lending communities to lend to. The idea of ecosystem lending does not only end at providing streamlined loan products but also allows lenders to provide borrowers with several categories of loan demand right at their fingertips. This goal was what ushered our creation of ecosystems for our lenders, offering them a choice of lending to their preferred “market’’ or ecosystem.
II. We are expanding credit into more markets: We are expanding rapidly to help lenders embed credit into more ecosystems. Be it agriculture, education, invoice financing and payroll, we are actively permeating all markets, thereby providing our lenders numerous lending choices, and simultaneously meeting the needs of the borrowers in those markets.
III. We created the best AI and Machine learning tools for our Lenders: Our lenders at Veend enjoy superior lending operation, and every tool needed to lend to their preferred ecosystem are right at their disposal. On their dashboard, they can simply operate their lending harmoniously, without sourcing for any external technological or data-mediated help. Here is how it works: We embedded top-grade artificial intelligence in the operability of our user interface for our lenders, enabling real-time monitoring of their lending and making it possible for every repayment to be visualised in real-time. It’s safe to submit finally, that there are currently no lending platforms in Nigeria as technologically well-equipped as VeendHQ to meet the dire demand for tailored loan services in Nigeria.
Final Thoughts
The potential of personalised loans to reshape the lending landscape in Nigeria cannot be overstated. With a diverse population, varying economic circumstances, and unique financial aspirations, the demand for tailored credit solutions has never been higher. The data-driven insights presented in this article demonstrate the benefits of personalised loans for both borrowers and financial institutions.
As technology continues to advance, financial institutions have a tremendous opportunity to harness digital platforms, data analytics, and artificial intelligence to deliver personalised credit experiences efficiently and at scale. This not only enhances customer satisfaction and loyalty but also contributes to reducing default rates, promoting financial inclusion, and ultimately driving economic growth.
However, as we navigate this transformative journey towards personalised lending, it is crucial to address challenges related to data privacy, promote financial education, and collaborate closely with regulatory bodies to ensure responsible lending practices. These concerted efforts can create an environment in Nigeria where personalised loans can truly flourish.
At Veend, we have successfully powered lenders to embed credit into ecosystems and provided them with a credit infrastructure to fuel these options. Now borrowers can easily find what kind of loan matches their preferred credit needs and access credit easily from these lenders. Find out more at bit.ly/lendflex and join lenders winning on Veend today.
