The Chief Executive Officer of Arvo Finance, Mr Ayotunde Bally, has commended the Federal Government for approving 173 loan apps and barring illegal online banks from accessing their user’s contacts and photos.
Bally made the commendation in an interview on Sunday in Lagos.
Arvo Finance is a fintech solution that provides quick loans, online loans, and short-term loans in Nigeria with no collateral and guarantors.
Bally said that the government’s decision to register loan apps highlighted the importance of fintech regulation in Nigeria to combat fraudulent lending practices and to protect customers from predatory lending.
He said that registering these loan apps would provide more transparency, accountability, and control in the lending process.
Bally added that it would reduce the risk of illegal lending activities and sanction lenders who engage in abusive practices.
The Arvofinance boss said that government’s decision to ban loan apps from accessing customers’ contacts and photos could be seen as a step toward safeguarding the privacy of individuals.
He said that the move would ensure that loan providers only had access to essential information to manage risk and offer credible lending services without subjecting customers to undue harassment or exploitation.
“Some of the disadvantages of the ban is that, it will slow down the lending process by extending the time required to verify customers’ identity, employment, and creditworthiness, and also increase non-performing loan’s of online lenders,” he said.
Bally, however, advised online lenders to use various methods to determine the creditworthiness of their customers in the absence of essential information databases.
He said, “while accessing customers’ contacts and photos may be a useful method of verifying customers’ identities and creditworthiness, there are alternative options that online lenders can use.
“One method is to require customers to provide relevant identification documents and other financial information, such as bank statements or pay slips.
“This information helps lenders to verify their customers’ identities while also providing insights on their financial history.”
He also urged online lenders to use an algorithm that assesses the creditworthiness of potential borrowers based on alternative data sources such as social media activities, online search history, and behavioral patterns.
These methods, he said, could be used to assess customers’ trustworthiness in a less intrusive way.
He said there was also the possibility of collaboration between online lenders and credit bureaus to pool information and create comprehensive credit reports.
Bally defined a credit report as a summary of an individual’s credit history that can include credit scores, payment history, current credit lines, and available credit reports.
He explained that this would create an essential information database that could help online lenders to make informed lending decisions.
The Federal Competition and Consumer Protection Commission (FCCPC) had on April 4, released a list of 173 companies approved to operate as digital money lenders in Nigeria.
The approval came as the deadline for the registration of the companies closed on March 27.
Out of the 173 companies registered and approved by the Commission were given full approval, while 54 were given conditional approval as they have other conditions to fulfil.
With the registration deadline now elapsed, Google will also remove all unregistered loan apps from the Play Store as it had earlier issued an update to all loan apps in Nigeria compelling them to provide an approval document from the FCCPC or be removed from the platform.
The loan apps on Google Play Store will lose their ability to gain access to their customer’s contact numbers and pictures starting from May 31, 2023.
