DIGITAL LENDERS

Borrowers seek low interests rates over customer service in fintech industry - survey

Customers care more about interest rates, unlike industries where they care of customer service

In Summary

“In terms of customer experience, this is an industry where emotions run high and the first experience determines whether a customer will promote a brand or not,” Ajua said.

Mobile lending app
Mobile lending app

Customers in the digital lending industry are keen on competitive interest rates, friendly payment periods as well as speed and efficiency in service delivery, Africa’s Integrated customer experience company, Ajua has said.

“In terms of customer experience, this is an industry where emotions run high and the first experience determines whether a customer will promote a brand or not,” Ajua said.

“Unlike other industries, customers care more about interest rates and speed than customer service.”

According to the firm's new Customer Loyalty Industry Benchmark for three months to June 2019, KCB M-Pesa service led in the mobile money lenders industry.

The digital lender recorded a Net Promoter Score of 41, owing to lower interest rates.

Other lenders including M-shwari, Tala and Branch had the customer experience metric score at 24, 16 and 15 respectively.

However, early this month, the KCB Bank announced to increase KCB M-Pesa rate to 7.5 per cent from 4.08 per cent.

The digital lender service will now issue quick loans at a similar rate to mobile lender CBA’s Mshwari which also charges a 7.5 per cent interest.

Barclays’ Timiza charges 6.17 per cent while M-Pesa’s Fuliza overdraft facility charges one per cent facilitation fee equivalent of 360 per cent annually.

According to the Kenya Demographic Household survey 2018, mobile loans are the third most preferred for credit facilities after SACCOS and commercial banks.

This has seen many banks join the space and come up with similar products to offer quick loans.

A Financial Services Deepening Kenya (FDS) in August last year showed that there are 49 digital credit providers in the country and every year a new one is introduced into the market.

However, the providers have been blamed for exploitation and charging borrowers interests as high as 180 per cent compared to banks that charge 13 per cent annually.

Central Bank's governor Patrick Njoroge has since said there are plans to regulate the industry on issues regarding high-interest rates or transaction fees, clear disclosure of pricing and terms and customer protection.

According to the survey, KCB emerged top in the banking sector in Q2 2019 with an NPS of 34 with customers citing lower interest rates on loans compared to other banks.

During the release of half-year results 2019, the bank cited to lend at 12.47 per cent below the maximum rate of 13 per cent