The lending ecosystem is loaded with new-to-market lenders who have sought to fill gaps in the lending coverage by creating credit financing options that are easily accessible to everyday consumers, whether it’s unsecured short-term personal loans, SME loans, buy-now-pay-later for goods in retail or the auto industry, and more. In this article, we explore how SeerBit’s payment solution for lending companies helps lenders recover their loans and reduce default.
McKinsey reports that 17% of Nigeria’s FinTechs are focused on consumer lending, with 57% of users attributing their adoption of these fintech products to ease of access and convenience. This means that in order for new-age lending companies to succeed, they need a payment solution that enables them to easily and quickly disburse loans and collect repayments.
Challenges lending companies face with payments
The lending operational chain consists of three operational processes: credit scoring, payments; disbursing/payouts and repayment collection, and reconciliation. Once a loan has been processed and approved, the borrower expects to receive the money right away and they will have no trouble repaying it. However, this isn’t always the case. Some of the issues that lending companies face are listed below.
Loan repayment default
Over time, the rate of loan repayment default has skyrocketed. This might be because of a number of things, including, borrowers do not have the money to make the repayment, borrowers having the money but fail to carry out the repayment due to inflexible repayment channels and an unreliable payment gateway.
For this article, we will explore how lenders can recover loans and reduce defaults.
Borrowers are more likely to default if there is only one way to make a payment or if the method of repayment is unfavourable. Additionally, if the lenders make use of an unreliable payment processor and the borrower experiences difficulties when making a repayment, the borrower may also default.
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Learn more about how payments technology can increase your loan recovery rate
Failed Transactions
As previously mentioned, most users prefer these FinTechs over banks because of their accessibility and convenience, so it’s critical for these new-age lending companies to be able to process loans, disburse funds, and accept repayments quickly and easily. Unfortunately, some of these lenders frequently experience failed transactions, which causes delays in disbursements and difficulties with repayment for the borrower.
Reconciliation
Lending companies must be able to manage their fund payouts and collections due to the high volume of transactions that occur on these lending platforms daily. The procedure can occasionally be stressful, particularly for collections agents who have to follow up with borrowers and request to see payment proof in the form of a debit alert from their bank or a mobile bank app-generated receipt before borrowers are cleared.
SeerBit payment solution for lending companies
Lending companies have access to a range of payment solutions to help them recover their loans and reduce the number of defaulted payments with SeerBit as the preferred payment solutions provider. Let's discuss some of them.
Flexible payment methods
Loan repayment defaults are a constant source of concern for all lending companies. Although it’s common for lenders to impose penalties for late repayments, more lenders need to realize that changes to the payment experience can significantly reduce defaults.
There are many reasons why borrowers fail to make their payments, but one of the main ones is because of poor payment experience. Therefore, making some of the changes listed below can lower your loan repayment default rates.
Recurring payments
Offering your borrowers, the option to pay off their loans in instalments will make it easier for them to repay than having to make one large payment at once. This is another way to improve the payment experience for your borrowers.
SeerBit's recurring payment helps you to offer your instalment payments from your borrowers by automatically debiting their bank accounts over a specified period of time.
SeerBit has a 98.3% success rate with recurring payments, ensuring that your borrowers can pay back their loans in small bits until payments are complete. And without any problems.
Offer multiple payment methods
Not every payment method is the same when it comes to payments. Different payment methods have different success rates.
For instance, 14% of card payments fail for various reasons, such as insufficient funds or the card expiring or being cancelled.
Other payment methods, such as direct debit and transfers, have much lower failure rates. At SeerBit, transfers and direct debits have a 90% success rate.
Offering your borrowers, a variety of payment options as a lender improves their payment experience and increases the chances that they will make their payments on time.
With SeerBit, you can provide your borrowers with every payment option on the market.
- Card payments
- Direct debit
- Transfers
- USSD
- Cash
SeerBit Pocket for Quick disbursements
SeerBit Pocket is a robust tool that lending companies can use to power quick disbursements and even easier collections.
With Pocket, lenders can assign sub-pockets to their borrowers and disburse money into these sub-pockets as soon as the loans are approved, ensuring the funds get to their borrowers quickly.
Pocket also allow lenders to assign specific virtual accounts to borrowers, which they can use to pay back their loans if they prefer to pay with bank transfer.
Real-time insights
Lending companies can track the status of all their transactions in real-time, including payouts and collections, by integrating SeerBit’s API. This enables automatic communication with borrowers during the loan application, disbursement, and repayment processes, making the reconciliation process easier and more streamlined.
Sign up to SeerBit to start managing your payouts, and loan recovery better.