The Chief Executive Officer and Co-0wner of FairMoney, Laurin Nabuko Hainy, talks about using the power of technology to deepen financial inclusion.
Sir please tell is about fairmoney and how you began
My name Laurin Hainy and I am the CEO and Co-owner of the company; and we are trying to build a financial home for customers in Nigeria, that is our mission. Today we are the biggest digital bank in the country and our mission is to build the one bank for all Nigerians.
If you look at the statistics you will see that a vast part of the adult population does not make use of financial services at all, out of 100 million people, 60 million do not have a bank account. Why are these people not using a bank account? In my view, one of the reasons is that what are banks doing today for the customers that incentivises them to want to use financial services. In our view, we started first with the lending product because the small man needed a business facility for him to build and grow his business, and that is what we provided.
And now we have started to offer banking services, we have received our microfinance license from the CBN and you know the outcome is great, you know at Fairmoney we want to use the power of the internet to bank the 60 million Nigerians that are not banked, that is what we are aiming for.
We have heard that Nigerian banks typically shy away from lending small businesses and individuals but you are doing that so what has been the repayment rate and we have heard that women are more likely to repay than men so how have the experiences been?
First of all Nigerian banks shy away from lending money but talking about what we are doing, we use the power of technology to underwrite loan facilities, we have come up with very sophisticated artificial intelligence methods to underwrite loan facilities and these technologies are something that we have developed internally and many larger banks do not have.
We have been able to crack the challenges of growing a loan book while maintaining prudent risk appetite and good NPLs for the market. At FairMoney our NPLs are lower than the average standard while our growth rate is higher than the average standard and that is exactly what we want to continue doing in the future.
As an entrepreneur, you see challenges as a stepping stone for you, so what are those challenges you have seen so far, especially in the market?
The major reason why so many Nigerians today do not have access to financial services is because financial services players do not take the last mile to go towards its users, and it is not that they do not need financial services, it is just that the ones that are available are not good enough. And one of the biggest t reason is that the infrastructure is not yet there, most of the users today do not have a bvn, we always talk about 40 million users that have a bvn but what about the 60 million that do not have a bvn, that is more than 60% so the chance of been seen in the market as we are looking for to collaborate with regulators is really to build the right layer of infrastructure to then include those customers that do not have access to financial services today.
You said that one of the challenges you are facing is lack of infrastructure, is that the biggest challenge as a company that you have encountered in Nigeria?
Nigeria is a fantastic market for Fintech with a very large population, every year there are four million new adults joining the adult population and that is 40 thousand times more people than we have in this hall, every other country would like to have these statistics. But if you don’t have the right infrastructure to provide the right services to those, no credit profiles, no KYC links, then it is getting challenging for an operator to operate. So, I think we all need to work together to build the right infrastructure for all of us to operate.
What value are you bringing in, what gap are you filling in terms of infrastructure?
First of all we are not building infrastructure rather we are relying on infrastructure, the job that is to be done by us is to use the existing infrastructure like the bvn system and the pay-in and pay-out methods provided by paystack, our job is to use that and then build a customer phasing service on top of it that is then solving the customers financial needs. So, this is what we did and so far, we have built the largest digital credit business in the country and now we are also offering salary accounts and debit cards to all our users.
Do you have a vision of being a top shot in terms of insurance, wealth management apart from lending and the other things that you do, do have that in your plan?
Yes we do, you know everyone wants to provide the maximum quality to their customers and if you look at the past we started only as a lender and now we also offer payments, current accounts, debit cards and in the future we would also like to offer insurances to our customers.
So far how many customers do you have and what are your projections?
At the end of the year we are expecting to have opened two million bank accounts because we are now a micro-finance bank.
We have a case where we have a lot of business startups where a case can be made that they are basically serving the same set of people, so what are you doing to go beyond those people in the urban areas who already have access to financial services and probably get to the right mind?
The first step we took was to build a company and not just another bank because every Nigerian has two or more bank accounts like me. So, our approach was to start with a service that none of the banks offered. When we started in 2017, no bank was offering our service and that was lending and that was how it all was then. Now that we have attracted a lot of customers with transparent, seem-less processes and collateral free loans, we have started to offer other financial services because in my view we have proven to many clients in Nigeria that we are a reliable financial partner.
Nigeria, France, India, where next and when?
I think we are very excited about the opportunities in Nigeria and India, you know two of the biggest countries in the world and they are very underserved and it is only two hands that we have and let us make good use of it.
Apart from being underserved, what other similarity do you see in Nigeria and India?
Well, there are a lot of similarities contained in the infrastructure problem though India is a bit ahead because in India you have the archive system, most of the customers that they have some levels of identification method but the big similarity between the two markets is that there is a very vast majority of the customers not served by the commercial banks, these are the ways we use to connect both markets.
Sir you did mention collateral free loans so basically… especially when there is covid?
We use technology, we use data, machine learning to understand the simple risks of the clients and decide within ourselves what risk we are willing to take and what facility of … you are willing to offer, today’s technology is a new thing in Nigeria but I can tell 10-20 years from now it will be like everyone holding a smartphone so it is the same thing using alternative underwriting methods.
What have been your default rates?
For now, we are quite expanding but it is still around 10%, in Nigeria we are looking to decrease that more.