Poor infrastructure, bane of servicing ‘the unbanked’ in Nigeria – Laurin Hainy, Co-founder, FairMoney – Nairametrics
In this interview with Laurin Hainy, Chief Executive Officer and Co-founder, FairMoney, he explains to Nairametrics that most adults are unbanked in Nigeria due to poor infrastructure and the inability of financial institutions to use technology to meet the needs of the unbanked. Excerpts:
About 60 million Nigerian adults are not using bank accounts today. What do you think could be responsible for that?
In my view, what are the banks doing for the customers in terms of creating incentives to enable them use financial services? Not much. We started first with the lending products because we realised that the small man on the street needs capital to do the business, which financial institutions are not offering, and that is what we are providing. We want to use the power of technology to bank the 60 million unbanked Nigerians.
What has been the repayment rate of disbursed loans and is it true that women are most likely to repay loans than men?
The repayment rate has been impressive because we are using technology to underwrite loan facilities and we have also used Artificial Intelligence to underwrite loan facilities. This is a technology we have developed internally and a lot of banks do not have them. That is how we have been able to grow our loan book while maintaining prudent risk appetite. Our Non-Performing Loans are greater than the average standard, i.e our growth rate is higher than the average industry standard. Our default rate has been around 10%.
What are the challenges you have tackled so far?
Another reason most financial institutions do not cater for the unbanked is that they could not go the last mile to serve their customers and that is due to poor infrastructure. That is our main challenge. We are willing to partner regulators and other fintech players to build the right layer of infrastructure to include the 60 million customers that do not have BVN and access to financial services today.
Nigeria is a fantastic market because every year there are about 4 million people joining the adult population in Nigeria, but if you don’t have the right infrastructure to serve them, then it is a big problem for the sector. For us, this is the biggest challenge in the industry.
There are hundreds of Fintech firms in the country. What gap do you want to fill in the industry?
We are using the existing infrastructure to build a customer-facing service on top of it to solve the customers’ financial needs. We are also offering salary accounts, and debit cards. The idea is to build the first and the biggest online bank in Nigeria that will be in existence in the next 100 years. In the future, we’d also like to offer insurance services to our customers.
How many customers have you served so far?
By the end of the year, we would have opened over 2 million bank accounts and our registered users should hit around 5 million by the end of the year too.
You are in Nigeria, France and India. Where next and when?
We are very excited about the opportunities in Nigeria and India, because they are two out of the four biggest countries in the world, but they are much underserved. So, we will love to explore the opportunities before we move elsewhere.
Apart from being underserved, what are other similarities in the two nations?
A lot of similarities, particularly in the state of the infrastructure, though India is a bit ahead because most of the customers we have in India have some level of identification method. The big similarity is that there is a very vast majority of the customers that are not served by the commercial banks.
