Are Quick Loan Banks a Necessary Good or a Necessary Evil? – Nairametry

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A financial expert, Ugo Obi-Chukwu, shared his experience with using one of the many quick loan banks in Nigeria.

According to him, these quick lending banks are becoming a major competition for traditional banks. He did however let it be known that their modus operandi recalls a dark past.

See his Twitter feed below-

So I received text messages from Kwik Money for a few weeks now and I decided to give it a shot. This is my experience.

I picked up my phone and decided to follow their lead.

As can be seen from above, you can visit their website to apply or apply using the USSD code and expect you to just follow the prompt. This is an apparent measure to ensure that you can get loans without relying on the Internet.

Everything looked ok and I’m already salivating. I quickly applied for a loan.

I went straight for a loan anyway.

I thought about it well here. How much am I going? Well, I put on my bookkeeper hat and went for the lower one. Don’t tease me oh.

But 20% anyway? Looks like some of these QLBs (that’s what I call them) are offering really expensive loans. I didn’t even know if it was 20% per month or per year or per day. I think it’s per month. But they should just say it nau.

I selected my jeje N500 and waited for my alert.

And then I asked myself
where will this money go? My bank account? I don’t remember sharing that. Maybe they’ll just text me an alert on my cell phone and I go get it on MTN? It sounds unbelievable. Loans like that?

1 minute, 1 hour and now a day has passed and I have yet to see the alert. Please, if you know the Twitter account or the KwikMoney contact, ask them where the N500 is.

Quick loan banks are growing in Nigeria and putting traditional banks on the defensive. However, their modus operandi is reminiscent of a dark past

In the heyday of new generation banks, they applied the same model. Mega announcements, easy to get unsecured loans and high interest rates. Unlike today’s startups, they weren’t backed by patient capital, so they quickly went bankrupt.

READ ALSO: FG launches $ 1 billion farm loan program, claims it will create jobs

This time around, some startups see the losses and revenue growth as a sign of growth. Default rates (NPLs) are more accommodating for these QLBs, which only means that they have an incentive to take more risk.

Add to the fact that the competition is prevalent with every lender looking to outdo the competition with faster loans. Is it good for the Nigerian economy and the middle class in particular, yes but it is a potential banana peel.

Collectively, I doubt their capital base reaches a 10th or GTB net assets, so maybe they don’t pose major systemic risk. However, these things take a long time to unravel and I hope if that ever happens we will be better for it.

Have you ever used any of these QLBs? Thanks for sharing your experience.



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