Omodele Adigun
Sterling Bank last April blazed the trail as the first bank in the country to introduce loans in five minutes to salaried customers. The bank followed that up this year by extending it to non-customers. At an interactive session recently, the duo of of Mr. Shina Atilola, Divisional Head, Retail and Consumer Banking, and Head of Value Chain Banking, Mrs. Benedicta Sadoh,
gave insight into how the banking public are latching on to the initiative to meet their needs.
Excerpts:
The platform
Atilola:You can benefit from Specta loan without necessarily open account with Sterling Bank. That is the first of its kind in this part of the world. And remember, we are known for innovation. Of recent, we discovered that other banks are trying to catch up with what we are doing with Specta. As it is in our tradition, we always try to extend the goal post; we are always a trail blazer,so this is the first of its kind and we are happy to automate that. So come and apply for loan without necessarily go to Sterling Bank office; without necessarily have account with Sterling Bank.
Loans
Sadoh: Last year, we talked about N10billion and 10,000 loans. But we did over11,000 loans and we did close to N10 billion. So we were able to introduce credit cards into the platform. So it was not only that we were able to give personal loan alone, we were able to introduce credit card and we were able to give device financing through Specta. So we were able to extend our offering beyond the scope that we thought that we would be in 2018. For 2019, we are looking at N40billion mark, and minimum count of 50,000 loans to be given out.
Social media
Atilola: We have been giving out loans to those who actually have no accounts with us before but at a very low end. How do we do this? We use the social media as a platform to analyse, we do algorithm. I am not speaking about the Specta variant, but I am speaking about what we have done before now, before this launch. We’ve built an algorithm that speaks to your social media credit, what we’ve done on social media and all of that.We brought those data together, built an algorithm that is able to credit the kind of person you are.Two things are more important apart from the analysis: your character as a person and your capacity.
And through the social media, we are able to say what kind of character is this person, and that has helped us to develop that programme and disburse a whole lot of loans; the low end loans. I think the maximum is N10,000.And we see people pay back this N10,000. We have tested with that.
What we ve been able to do is the fact that it has given us access to account statements, three months or four months statements, even of other banks, and all of these we have done digitally. We analyse your cash turnover; average turnover you are doing monthly; we look at your capacity, to tell us your financial behaviour over that period of time. Based on that, that is why we say you should open account with us so that we will know your financial behavior over a six month-period. If I can get your financial behaviours from other banks, I can make that same judgement. And I am going to do that digitally because I have data analysis, the financial intelligence that will give me insight into your behavioural patterns when it comes to finance. Based on that,I can give a judgement that can give you loan. And more importantly also, Iam going to look at your performance history with credit, looking at the credit bureau. Based on all those things, I can make a prediction that yes, I can lend you this amount of money and you will pay back.
Through research, we discovered that majority of Nigerians at a particular level want to take loans and pay back, data has shown that. Two, they wont allow more loans to be an obstacle for them to get higher loans or higher benefits. But more importantly is the fact that we have our own digital way of collecting this money when due. When you don’t pay back, we know how to get this money. Also building into this platform are mitigants for defaults where we can fall back to.
NPL
Sadoh: As we speak, based on Specta basic, we have zero per cent non-performing loans. What that means is that our people are paying. Dont forget that when we launch Specta basic last year,we backed it up with insurance cover because a lot of you said many things to us like salaried customers don’t have gratuity; they don’t have terminal benefit; what happens if anything goes wrong if they are asked to go(sacked) etc.
We got an insurance company to partner with us, and as we speak, zero per cent NPLs. All loans repayments are up to date.
Atilola:And that is what gave us the confidence and boldness to expand Specta
Repayment
Atilola: The reason I cant say that I have got the N10billion back is that some people took the loan for three years; some for four years; some for two years, one year. What we are telling you is that none of them has defaulted; none as of today. A situation where some of the loans are due for repayment in June, but they didn’t pay in June but they pay in July. What happens is that some didn’t get their salaries as of 29th but on the 1st of the new month. We still accommodate that because the salary comes directly to us and we deduct our own first. So if the salary is delayed, it is not workers’ fault. Before we give them this loan, we have already done the evaluation of the company they are working with. So the company has the capacity to pay. So those are some of the mitigants we have put in place already. So I am not saying that I have collected the N10 billion lent out because the N10billion is not due as of today. But what is due as of today, I have got. Yes, I may have three days, one week maximum delay, but they pay back. And for people that lost their jobs, we have said insurance covers it. We have done the insurance. Part of that loan is insurance. They pay us back because those people lost their jobs.So for the deformity of the initiative, we put insurance in place. So it helps us mitigate against those things we have highlighted.
There are special interest rates for non-customers who do not want loan. We give you opportunity. I will tell you the two options. You can also have Sterling Bank account and enjoy the lower interest rate. And opening an account is not all that tedious.. It is an online registration. You want me to disburse into the customer’s bank, that (Sterling) bank is merging with today, this is the interest rate youwill enjoy. You click here to have Sterling Bank account instantly, this is the interest rate you will enjoy. So we give you the benefit of choosing. It is either you stay with the bank you are, and take high interest rate or you move to Sterling Bank and take a lower interest rate.
Insurance
Sadoh: On Specta, there is no minimum loan amount because the goal is to meet the lending needs of people. So there is no minimum. But there is a maximum amount per tranche. What we do right now is N5million first disbursement. But the new variant of Specta that is coming out will also have its own minimum. But as we speak today, the maximum loan is N5million.In terms of tenure, the maximum tenure for Specta loan is 48 months. However, it is specific to the individual.It is specific to the borrower. It is not cast in stone. If you want to take a loan for six months provided you have a capacity to pay back. In terms of the insurance, the insurance cost is borne by the individual. As you are taking your loan, as you want to pay the one per cent fee, management fee , you get to pay your insurance also.
The way it is arranged is that we have an insurance broker as partner who has done all of that. So a customer can not go and get their own insurance company.No. All that has already been agreed. It is part of the process. So all you need to do is just to sign up for the loan and everything is in place. There is an agreed fee, an upfront fee and all that. It is standardized.
New variant
Sadoh:That is exciting part of Specta we have talked about. Last year, when we launched, it was just for salaried people. The new variant is for both salaried and self-employed people.So if you are a professional, if you are a business owner, you can come to Specta for facility.
Challenges
Atilola: Yeah! We had little challenges. And some of the challenges have led us to have this variant of Specta.Several people that were not salary earners wanted to participate in Specta.That presented us an opportunity to look at them. There are also other people:they are salary earners but they don’t have accounts with Sterling Bank and the process of opening account with Sterling Bank might look too cumbersome for them. We now said, based on that, we created this variant of Specta for them to solve that problem and also created an account opening platform so that they dont dilly dally, taking two days, three days, one week to open account.Instantly, within two minutes, you can open account online, get your account number and do your transaction. So, some of those problems then gave us an opportunity to create another variant of Specta to provide answers to those question that people were asking.
Interest rate
Sadoh: On Specta, basically, the interest rate depends on whether you are coming on Specta basics. It all depends on if you are coming from a community or you are coming from a company where we will have negotiated with your HR (Human Resources manager) on the specific rate.So on Specta basics, the interest rates ranges from 22 per cent to 28 per cent. With the new variant of Specta, what we are looking at is not whether your salary is regular or not. What Specta will be doing then is to interprete your basic statement to see if you have a turnover every month. It may not be your salary because a lot of salaried people do business by the side. So if they do business by the side and they are having inflows regularly into their accounts, Specta will give them something.That is why we have said that Specta is for everybody.It doesn’t matter even if your salary is not regular, but if you do business by the side and inflows from your business is being domiciled into the account.Specta will interprete it and come up with a loan amount for you.