How Fairmoney new License to Operate as a Fully-fledged Microfinance Bank will Impact their Lending Power

Fairmoney has been a key player in the quick loan business since its entry - offering flexible lending options for its customers across all Nigerian states.

It was recently announced that Fairmoney, (the Neobank) would begin full operation as a licensed Microfinance bank - What would this mean for the fintech company and how would this impact their lending power? Plus, how will this also affect or rather create opportunities for existing customers and the potential customer market. 

Let's take a deep dive into these key points and see how this will have an impact on Fairmoney's lending power and the opportunities it may create. 

Before now, Fairmoney only started just like the other technology-backed lending agencies using its mobile application as its method of collecting customer data, data scoring, and using that to determine who is eligible for a loan. Or how much a potential customer can get from the platform based on the data evaluation from their internal system - We believe these decisions always come to a conclusive end once their internally built data analytic tools draw the necessary information from each user's BVN. 

This has been the usual model for all lending platforms that play in the fintech space - It may be slightly different for traditional lending platforms, like the conventional microfinance banks, but these new-age lending platforms have gained more market share based on their quick analytic process that allows customers to click a few buttons and within 5-10mins or thereabout, their loans are ready for disbursement. 

What's more intriguing is, the on-boarding process is quite seamless and doesn't necessarily require paperwork of any kind, just a few clicks and taking a selfie would usually do the magic - Unlike when you'd visit the traditional lending banks (microfinance banks) and you'd have to fill papers after papers, ticking boxes and signing multiple forms. 

Worst of all, you may have to wait for a few weeks or months to get a response from the bank, and most times, it could very well be a rejection call. Another thing is because these banks use analog vetting systems - They may even request that you take them to where you live, work or sell (if you're a business person) all these verification processes could be discouraging - Hence, the emergence of Neobanks took the lending market by storm. 

Nigeria is a cash economy, and given the many responsibilities that are weighing on most people's shoulders, the bloom of this newest lending model was sure to happen - It didn't require much effort in marketing. The vacuum to fill was already there, all that is needed is to position in that market to grab a share. 

Fairmoney has been playing a key role in servicing this market and over the few years, they've garnered well over 5 million users, disbursing 117 billion loans. 

These are outstanding numbers if you ask me - With that said, there are other key areas that Fairmoney has shown innovation.

First, it used to be just a loan app, but later, they rolled out a wallet feature that allowed users to add funds either to save for a purpose or to pay for goods and services - Customers could pay for bills such as cable subscriptions, electricity subscription, Internet subscriptions, and recharge cards could also be purchased from within the app.

These features attracted even more users to the platform - And to say the least, recently, Fairmoney allowed users and the general public to earn from their platform by offering an investment opportunity for those who'd like to share in their profits by putting in cash and getting a cut from profits made through interests collection from lenders.

This initiative gave Fairmoney an edge over other lending apps. Now, we thought that would just be it. But it came as a surprise when news came through that Fairmoney has acquired a license to operate as a fully-fledged Microfinance Bank.

How Is This Going To Impact Fairmoney's Operations & Growth?

At kustomers, after much evaluation, we've come to establish our conclusions based on 2 things. 

1. Growth: This new license, we believe will create room for growth opportunities both in short term and long term basis. We strongly believe Fairmoney saw this, and as a forward-thinking organization decided to key into it.

The success of any organization, whether fully backed by technology or still operating manually, will be dependent on the new changes they're willing to put their bet on and calculating the future outcome of it. Not only do we think this is a step in the right direction, but we also believe that it was well thought out by the strategy team and the key decision-makers. 

2. Open More Investment Opportunities: Beyond growth predictions in terms of customer acquisition and more lending power - We equally see this as a way to attract more investors. Haven built a brand worthy of trust, this new step will change more potential investors' perception of the organization. 

Many investors always want to take their time before deciding what to invest in, especially when it has to do with technology-driven ventures - There's usually a lot of scepticism, so for this reason, many potential investors just tend to sit on the fence for a while - Especially when there are no clear differentiating elements in the products or services.

Lending Power: Since Fairmoney stands a greater chance to attract new investors, it is quite certain that the old investors will surely stick around, longer. This will increase the lending power of the fintech company beyond its current lending capability. And more lending power will translate to more profit, more profits will also open doors for more marketing opportunities so as to key into more channels to reach potential customers. 

How Will This Affect Customer?

The new development will raise the bar for the limitations that most customers might have experienced - This means that customers will have more lending options available, which will help them choose what's best for their needs.

Since we strongly believe this would boost Fairmoney's lending power, it automatically translates into more wins for their loyal customers who have been with them for all these years, and even open the door for new customers who are yet to on-board. 

Our Conclusion

Kustomers conclude that, if the company vision & goals are not tampered with - Fairmoney has the potential to experience tremendous growth within a short period.

Secondly, if the team continues to harness the use of the right channels as a way of publicizing its products and services, investing in the right resources and people, we project a swift expansion timeline, especially based on how their users currently perceive the brand and the values they attribute to its operational model.