Home ECONOMY CRB Threats Pushing Kenyans Away from Mobile Money Lenders

CRB Threats Pushing Kenyans Away from Mobile Money Lenders

by biasharadigest

Despite
banks continually facing stiff competition from mobile money providers and Saccos,
mobile money debtors are feeling the pinch on tactics employed to make them
service their loans.

Data
from the Integrated Customer Experience company Ajua, however, shows that
Kenyans are more informed and are actively exploring other options that suit
their budgets particularly mobile money lenders.

Mobile
money usage has grown from 27.9% to 79.4% in the last decade compared to a
growth of 26% in traditional banks usage over the last 13 years according to
the 2019 FinAcess Household Survey co-written by the Central Bank of Kenya
(CBK), the Kenya National Bureau of Statistics (KNBS) and the Financial Sector
Deepening Kenya (FSD).

Ajua
reports that 27.3% of Kenyan consumers who did not have bank accounts cited low
income and working in the informal sector as the main reasons for not having
bank accounts.

“Some
preferred using M-Pesa because it allows them to save relatively less money
compared to banks which close an account once it remains dormant for a while,”
notes the report.

The
respondents also mentioned that they were discouraged by the relatively high transaction
charges.

Speaking
on why they preferred mobile banking to traditional banking, some said that
that they ceased operating a bank account once they lost their job.

CRB Threats

This
makes joblessness one of the reasons why Kenyans are not operating bank
accounts.

On
the downside, the loan sharking tendencies by the mobile lenders are becoming a
deterrent to people who would be interested in taking credit.

The
report points out that despite the growing demand for these services, customers
increasingly reported experiencing hostile treatment when being asked to repay
their loans.

“In a bid to recover debts, some lenders resort to accessing information from their customer’s contact list prompting their contacts to push the loanee to clear their debt without their customer’s consent, an act which many customers feel is a breach of privacy.”

Also see: How a SIM-card Registration Threatens Your Privacy

When Ajua asked Kenyans what they considered most important when choosing a mobile money lender most customers considered interest rates, repayment duration, the period of the loan disbursement and dignified treatment of customers.

Speaking
on their criteria, one customer replied, “Reasonable rates, they do not call or
text everyone on your contact list to tell you to pay the loan if defaulted for
some time…”

In
the long run, these methods of debt recovery ranging from intrusive calls to aggressively
texting loanees multiple times in a day are both ineffective and unsustainable for
lenders as such tactics often lead to a high churn rate and loss of revenue in
the process.

Ajua
recommends that to prevent this from happening, mobile money lenders need to
improve their customer experience, stay competitive in the market and be
compliant with the Data act of 2019.

“One way would be to leverage the existing gaps and ensuring transparency by simplifying and communicating terms and conditions better, charging reasonable interest rates and ensuring fair and respectful treatment of customers.”

Read: What It Will Cost to Close Your Bank Account

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