Accessing micro-credit is faster, easier and flexible with Social Lender

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Accessing small personal loans in Nigeria from the traditional financial institutions has always been a challenge for many people. However, with wider mobile penetration, small finance institutions are providing innovative solutions to people. Faith Adesemowo, executive director of Social Lender spoke to FRANK ELEANYA concerning the innovative service the start-up provides to individuals. 

What do you do with social lender?

Social Lender is an online platform to give access to financial institutions and banks to be able to reach certain demography of people who otherwise will not have access to funds. It makes use of a unique algorithm that calculates and put together a digital fingerprint, which can be used to access formal credit. It is just like your credit card system. Credit cards are not readily available to a large population in Nigeria but we have come up with an alternative way of accessing formal credit using social and digital frameworks.

Who are the specific people?

We are talking about people who are banked but do not have access to what we call the credit card. We are talking about people who need urgent money for emergency and will not be able to ask their banks for it. Definitely, the financial institutions will ask for collateral and we are providing different collateral. With your digital fingerprint you can now access a bank credit.

What criteria do you employ when considering someone for credit?

We take into consideration the digital print. We have access points, one being social media, we are including mobile data and we put together all of these. Over 70 factors go into our algorithm. Our algorithm is able to calculate what we call the social reputation score. The social reputation score is based on what the algorithm has been able to calculate from the users’ digital fingerprint. We are going to include machine learning in the coming months

What is the process?

What a user will typically do is- I need N10, 000 in the middle of the night, because we do only micro-lending, I will simply go on the platform. I will log in via my Facebook, Twitter or LinkedIn account. At the backend, the algorithm will audit and give a reputation score. The way it works is that, we are not the lender; we are just the platform that gives the access. What happens is that whichever financial institution is on board, I as a user can queue my financial institution and then proceed to request for cash. Every user can choose whatever bank they are comfortable with. The bank we have on our platform is Sterling Bank Plc. We have some major banks that will be coming on board very soon. As for the social reputation score on which the loans are giving out is a business rule for the financial institutions. Each financial institution agrees what social reputation score loans are to be given. The score ranges from 0 percent to 100 percent. If you have a score from 15% upwards, you can access credit.

How can a user build social reputation score?

As you get on the platform and audit is performed, what the audit is looking at is  your communication. Of course your account should have been over a year old, an audit would not be done unless the account is over a year old. What we do first is to make sure that this account is more than a year old. Then we look at the digital fingerprints. We look at your network and how many people are in contact with you. Basically we try to get as much information as possible. The beautiful thing about social lender is that we are a community-based platform. You can actually determine how much access we get. You can give us access to your friends, your wall; you will choose how much access you will give to the platform. After giving all of that access, you still have a score of 10 percent. The next is to introduce someone as a social guarantor. What the social guarantor does is to digitally guarantee your loan. No social guarantor can guarantee all the money; it has to be spread among different people. Like we said, we are making communities depend on each other and trust each other. We are bringing the financial institutions and communities together. When you add up social guarantor unto the platform, automatically your score will improve. With a social guarantor you are more than likely to access your credit.

Do you often deal with issues concerning privacy?

The truth is that you have to give us access. You log on to the system and there are terms and conditions you are meant to read and accept. We do not violate your privacy. We give you the box and you tick to grant access to social lender.

Is the platform open to small businesses?

We will definitely get there someday. The platform is relatively new; we are just over a year now. We want to be able to understand the system better. We also want to add things like machine learning and add more data point to give us a more robust view of what the demography is. To be honest, some SMEs are already there. We have a lot of testimonials. We have feedback. We are able to see what users want to use the money for and we have verified testimonials- people who have actually started businesses like a recharge card business. Whatever N10, 000 can do for you. We are looking to increase the maximum limit that will be dependent on a lot of factors.

How quick is it?

Honestly from the point of application, typically ten minutes. The only thing that will lengthen the time will be for first time users. During registration we need to be able to get your details, your bank account and so on. The registration process might typically depend on how fast the customer is, one hour. Subsequently you can just send SMS, USSD and 5 other channels to access cash after getting a reputation score

What role does the guarantor play in the case of a bad loan?

There is a message we sent to you clearly defining what a guarantor is. Should any default happen the guarantor bears some of the burden. There are two people, there is the social guarantor and there is the social referee. The social referee simply says, “I know this fellow, I have no obligations whatsoever.” For the social guarantor, in case he does not pay the money “I am willing to stand surety for him.”

What is the interest rate?

The interest rate is largely dependent on the financial institution that is involved. Sterling Bank will do about ten percent. Most financial institutions will do between five percent and ten percent. It is a business rule and it depends on how they want to go about it.

Have you had a default?

One amazing thing about the social lender is that we have able been to manage our default rate to at least five percent

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