Just a few years ago, one couldn’t even imagine giving loans to strangers by just looking at their online presence or by inspecting their smartphone usage.
But things have changed rapidly. Currently, Digital Financial Services are rising in Pakistan. The evidence of this boom is the launch of Asia’s first digital lending pilot by Easypaisa.
Next to join the party are CreditFix and TEZ Financial services, which are launching smartphone apps to offer loans to Pakistani customers on certain terms and conditions.
What is Digital Lending?
Before jumping into more details, we must understand digital lending first.
Everyone’s aware of traditional borrowing methods of money from the banks. Generally, the traditional borrowing takes days and the customer has to go through multiple procedures before he/she can receive the loan. In contrast, with digital lending, the time to receive the loan is hardly a few minutes.
With technology, many startups have initiated the process of giving loans — through Know Your Customer (KYC) check which uses smart algorithms to check customers’ transaction history — without having any fully functional bank at their back.
Now, let’s read more about these money lenders’ offerings.
Easypaisa Digital Loan
Easypaisa has launched its digital loan services this year. Easypaisa Mobile Account customers can avail the services easily using USSD menu *786#.
Loans ranging from Rs 1,000 to Rs 10,000 can be received depending upon customer’s risk-based scoring. Customers with good scores will be charged with very low-interest rates which will further decrease with time and rating.
Two-third of Easypaisa Digital Loans are processed within 60 seconds. Rest can take up to 3 minutes. Customers can return the borrowed money in 14 days.
TEZ Financial Services
TEZ is in its testing phase right now and is planning to launch an app in January 2018. The company will use borrower’s phone data to score creditworthiness. Additionally, TEZ also plans to offer services related to savings and investments in the next phase.
It only takes less than a minute to give the loan in case the customer qualifies for it. The company’s loan amount ranges from Rs 1,000 to Rs 10,000.
CreditFix, which will offer life-changing loans to its customers, aims to offer money with amounts as high as Rs. 2.5 Million. CreditFix will be using smartphone consumption pattern and publicly available datapoints to target low-income groups to help them start and expand their businesses.
Other than that, CreditFix also vows to provide a platform for loan providers which can showcase their loan packages.
However, starting loans aren’t instant. It might take 3 days for starting loan size of Rs 5,000 to reach the borrower. This is mainly because the customers will get risk-based pricing. Better risk profiles would result in cheaper interest rates.
CreditFix is the winner of USD 100,000 prize by Karandaaz Fintech Disruption Challenge, USD 100,000 prize by DFS Lab US, and PKR 500,000 prize by UBL Pakistan.
The companies are set to launch in December 2017.
This breakthrough in the field of technology is tremendous as it will help the low-income groups to boost their businesses. With the release of these services, small businesses would no longer have to rely on banks and go through the tiresome procedures to lend money.