The Future of Lending is Here

Posted on Posted in General

 

At One Finance, we are creating the future of lending.

But we can’t really talk about the future without visiting the past, so let’s run through a brief history of lending to help us better understand where we are now.

According to literature, lending was first incorporated in ancient Greece and Rome, where Pawnbrokers lent money (legal tender) to customers in a form of secured lending with items held as collateral keeping risks low for the lender.

Pawn Broker
Pawn Broker

Then we skip to the Middle Ages where Christians were forbidden from lending money with interest, while Jews could lend with interest to non-Jews. Traders in Venice at this time had access to money-lending services from Jewish lenders, like in  the Merchant of Venice.

.merchant-of-venice

Here’s a fun fact: Did you know that the benches where these old-time lenders did their business from was known as “Banca”, giving rise to the word “Bank”, and when a lender ceased trading, he would smash his bench “Banca Rupta” hence, the word “Bankrupt”?

OK, back to history. Move past the Middle Ages to around 1800’s where the rich lent to those without means and in return the borrower worked off their debt by working on the lender’s estate.

Then came the financial genius, Mayer Amschel Rothschild, who ‘invented’ international banking when he placed his sons in five European cities, creating a network for transferring money. Within a century, the Rothschilds were among the wealthiest families in the world.

Mayer Amschel Rothschild
Mayer Amschel Rothschild

But before we bore you with too much history, let’s come back to the present day here in Nigeria. In trying to keep up with the principles of good lending (Safety, Suitability & Profitability), Nigerian lenders hold religiously to the Cs of Credit (Lending):

  • Character – Attitude of the Borrower
  • Capacity – Financial repayment ability of the business
  • Capital – Starting/Recurrent Capital of the business
  • Collateral – Security for the loan amount

with Character arguably the most important in most credit circles.

In my opinion though, they’ve skipped the most important “C” of all, Customer Satisfaction, because looking at that list, lending in Nigeria isn’t any different from the Pawnbrokers pre-middle ages.

With growing competition and evolving customer needs, innovative ways of lending have to be explored, and the way to do that is through technology.

“Throughout history, the basic premise behind lending and the extension of credit hasn’t changed, however, the way lending happens has changed fundamentally. This change will only continue, driven by two fundamental factors – the progression of technology and the need for innovation to meet evolving customer expectations. Customers expect rapid response times and a hassle-free experience. Institutions that embrace the possibilities brought about by the internet, cloud, predictive analytics and future innovations that haven’t even been thought of yet, stand to benefit.” — Paul Thomas, Managing Director, Provenir

So as we create the future of lending, we envision a world where a customer:

  • doesn’t have to even leave his home or business place
  • doesn’t worry about collateral he doesn’t have
  • doesn’t worry about guarantors
  • gets access to affordable funds when he needs it
  • doesn’t have to save up for repayments

 

The Future of Lending is here and is available to you through Flex Advance: http://flexadvance.co