The United Bank for Africa (UBA) has said that they are leveraging technology to improve their operations on consumer lending among others.
The bank disclosed this on Wednesday in a webinar on loans with the theme: “Stimulating Nigeria’s Economic Growth and Impacting People’s Life”, which was monitored by Prime Business.
Speaking on the theme, Mr. Anant Rao, UBA’s Group Head, Consumer Lending, gave insights on the approach the bank is using to navigate current challenges in the consumer lending space.
Digitizing lending is one of the plans Mr. Rao said the bank is adopting to scale up this sector. Others include expanding to customers of other banks, leveraging the power of ecosystem which has to do with fintech partnerships and convenient user-friendly products.
Emphasizing the digitizing of lending, Mr. Rao said the bank is using technology in profiling credit-worthy customers in order to reduce non-performing loans.
“We are using a lot of advanced scoring techniques and statistical methods and algorithms, we have the data, I have debit card data, I have prepaid card data, I have mobile usage data. Data drawn from our database is a strategy for UBA, so we are creating a data warehouse whereby I can profile you and know exactly what is happening in your business”, he said.
The UBA Consumer Lending Group Head said that from the data they have, they know the customer’s inflow and outflow payments, even his behavior, allowing them to use all sorts of data to create profiles for an individual and then assign limits based on his or her behavior.
“So we are using all sorts of data to create profile for this individual and then assign limits based on his behavior. How is he repaying those loans? What is he doing? That way we are going to do mass lending, That is why I can simply say that the 3-1-0 philosophy can easily work for us, because within three minutes you can be evaluated, it will be decided and you get a yes or no answer and within one minute you get your account credited and alert comes to you. So you don’t need to call anybody and say I want to do this, even we are getting into a situation where we want customers to decide how long you want to take the loan. We will use our credit scoring and algorithms to actually profile customers and then lend to the right people.”
On the proportion of consumer loan to total loan of the bank, Mr. Rao admitted that they are not where they want to be yet which is why they are putting things in place to scale up.
“Today consumer loan contributes less than 10% to our total loan portfolio but we want to go beyond that. We want to ensure we have the right infrastructure, the right technology platform and the right recovery and collection infrastructure. We are massively investing in collection infrastructure.
“You see how we are going about this whole thing, definitely we are resetting our operating philosophy on lending and ensuring that we manage these processes in a very safe, sound, secure way. We have a response to this, we are using technology. So essentially it is less than 10% at this point in time but we have the ambition to do much better. And that is why we see potential even in the current state we are; the potential is very high,” Mr. Rao added.
Asked about the future of credit card which is one of UBA’s consumer lending products, Mr. Rao admitted that credit card is still unpopular in Nigeria but said the bank will be innovative on that.
“Credit card will take time to embed into the system but what I am going to tell you is that we are going to innovate in the space. We want to turn debit card into credit card straight, so we are going to lift it up from there, and then buy now and pay later is going to be another variation of that credit cards, but our initial strategy on credit cards is to lend to our salary customer base because we know them and we have some history with them, and we ensure that it works properly and then the customer needs to understand how credit cards work.
“One has to be very careful about credit card as a product because if you don’t do it responsibly you may end up in a debt pile up, it can also lead to a lot of problems from a social and family point of view, so we have to educate customers on credit cards and credit cards doesn’t give you license to go and spend on whatever you feel like.”
On what government can do to help, Mr. Rao said that introduction of BVN as a means of identification is good but Nigeria needs to improve more on KYC processes to ensure accountability. He also said that legal frameworks have to be drafted and enforced by the government.
The UBA webinar was well attended by journalists as well as some top players in the financial sector.