Month: September 2024

Lending is a meticulous business demanding unwavering attention. The success of your lending enterprise hinges on diligent oversight of operational metrics. Regular, preferably daily, review of performance indicators is crucial to steering your business on the right course.

The digital age has amplified the pace of lending activity. With increased accessibility, your loan portfolio can expand rapidly. This growth underscores the imperative for robust monitoring systems like Tendar.

This article will explain five (5) activities to monitor daily as a lending business.

• Loan Application Volume and Approval Rates

The number of loan applications a lender receives and the approval rate are critical indicators of business health. High application volume suggests strong market demand, while a low volume might signal issues.

The approval rate reflects the lender’s underwriting standards and risk appetite. A high approval rate could mean a less stringent process, while a low rate might indicate a conservative approach. Doing daily checks on this is essential for sustainable growth and risk management.

• Loan Performance Tracking

Loan performance tracking involves monitoring how loans are performing throughout their lifecycle. It includes assessing repayment behaviour, identifying potential risks, measuring the overall health of the loan portfolio, managing potential risk effectively, and optimizing collection efforts.

• Disbursement and repayment activity

This cyclical process allows lenders to provide funds to a borrower (disbursement) and subsequently collect those funds back (repayment). It’s a core function of lending that impacts cash flow, risk management, and overall operational efficiency. Accurate and timely tracking of these activities ensures smooth operations, financial stability, and risk mitigation. 

• Credit risk assessment updates 

Credit risk assessment updates are one of the cornerstones of lending that must be tracked daily in lending institutions. It involves continuously monitoring and reassessing the creditworthiness of borrowers. This process entails tracking changes in borrower information such as credit scores, income levels, employment status, and overall financial health.

• Customer Behaviour Analysis 

This activity gives insight into how customers interact with your products and services as a lender. It includes analyzing loan usage patterns, repayment behavior, customer engagement levels, and other relevant data to make an informed business decision.

Neglecting these critical activities can have severe consequences. Without proper monitoring, operational inefficiencies, financial risks, and customer dissatisfaction can erode your lending business’s foundation.

Tendar’s all-in-one lending platform allows lending businesses to track the activities of their lending business daily. Everything necessary for a smooth operational activity in your lending business is available on Tendar.

Need to start lending smartly using Tendar? Send an email to hello@tendar.co or talk to sales via tel:+2349039181976.

In the olden days, several traditional savings and lending practices were prevalent in many African communities, which have long been a lifeline for individuals and small businesses. 

Some call these saving practices Esusu, Ajo, or Adashe. It offers a platform for mutual support, enabling members to save collectively and access funds when needed. However, the inherent limitations of this analog system are increasingly apparent in today’s fast-paced digital world.

Challenges such as manual record-keeping, lack of transparency, limited access to funds, and susceptibility to fraud are becoming increasingly problematic. Moreover, esusu’s informal nature restricts its ability to scale and reach a wider audience. To address these challenges and unlock the full potential of this valuable financial tool, digitizing your traditional lending is essential in today’s digital world.

While these old means have been a cornerstone of financial support for many, their limitations are increasingly evident. 

Here’s why digitizing your lending business will be a game-changer:

• Transparency: Digital records provide clear visibility into contributions, disbursements, and balances, promoting trust among members.
• Accessibility to Funds: Members can access their funds and information anytime, anywhere, eliminating the need for physical meetings.
• Efficient Management: Automated processes streamline administrative tasks, saving time and reducing errors.
• Wider Audience: A digital platform can attract more participants, including those in remote areas.
• Financial Inclusion: Digitization can help bring more people into the formal financial system, promoting financial inclusion.
• Additional Financial Services: Beyond savings and lending, digital platforms like Tendar can offer other financial services like insurance, investments, and BNPLand credit scoring.
• Data-Driven Insights: Digital platforms generate valuable data for participants. They have access to information that can help them improve decision-making and risk management.

If your lending business evolves from a traditional savings club into a powerful financial tool that empowers individuals and communities, you position your business for more groundbreaking opportunities. 

Let Tendar help you tap into these opportunities for your business growth.

While the concept of credit scoring is similar to that in other countries, the Nigerian credit landscape has unique characteristics. 

Unlike the standardized FICO and VantageScore models, Nigerian lenders often use their proprietary credit scoring models.  

Determining a specific numerical value for a “bad” credit score in Nigeria is complex due to the varying scoring models used by different lenders. 

However, general indicators of a poor credit score include:

• Payment History: Consistent late or missed payments on loans. Lenders view borrowers with bad credit as a risk, which means they’re less likely to approve you for credit. Since banks and lending institutions typically have rigorous qualification standards for their products, getting approval for a loan can be difficult for anyone with a bad credit score.
• High Debt-to-Income Ratio: A high debt-to-income ratio is a red flag for lenders. It can lower your credit score and reduce your chances of loan approval.
• Multiple Loan Applications: Frequent loan applications can negatively impact your credit score.
• Public Records: Negative information like bankruptcies or judgments can lower your score.

How to improve a bad credit score

There are many ways to improve your credit score. Ultimately, it comes down to taking strategic action and consistently making financial decisions.

Here are six steps you can take to improve your credit profile:

• Check your credit reports: Regularly review your credit report for errors and discrepancies. You can access these reports weekly. Dispute any errors and identify the negative information bringing down your score so you know where to focus your credit repair efforts.
• Avoid late payments: Since payment history makes up your credit scores, paying your bills on time is one of the best ways to build and maintain strong credit. Set up automatic payments on your accounts to prevent late repayments.
• Avoid new credit: Avoid applying for multiple loans simultaneously.
• Use Credit Wisely: Responsible credit usage can help build a positive credit history.
• Reduce Debt: Lower your debt-to-income ratio by paying off existing debts.

Building a good credit score takes time and discipline. If you follow preventive measures against credit scores,  you can increase your chances of securing loans with favourable terms.

Are you experiencing difficulty checking your customer’s credit score? Tendar can help you.

The lending industry is a complex and competitive landscape where strategic business model selection is paramount to long-term success. A well-crafted business model can drive growth, profitability, and customer satisfaction. 

However, numerous pitfalls can derail even the most promising lending ventures. This article delves into common mistakes lenders make when choosing a business model, providing insights into areas where strategic missteps can occur. 

• Market Misunderstanding

Lenders must thoroughly understand their target market’s needs, assess competitor strengths, and navigate complex regulations to avoid misaligned products, competitive disadvantages, and compliance risks. 

Not fully understanding the target market’s needs, preferences, and financial capabilities can lead to misaligned product offerings.

• Product Misalignment

Product-market fit is crucial for lenders. Developing products that do not address the actual needs of the target market can result in low demand and high default rates. Incorrect interest rates and fees can impact profitability and customer satisfaction. 

Relying on a single product type can expose the lender to market fluctuations and increased risk. Mismatched offerings lead to poor sales and increased risk. 

• Risk Management Failures

Poorly underwritten loans can lead to financial losses, while overexposure to a single market segment increases economic sensitivity. Effective fraud prevention is crucial to protect a lender’s bottom line.

• Operational Inefficiencies

Outdated technology, inefficient processes, and talent shortages can hinder operational efficiency and customer satisfaction, impacting a lender’s ability to compete.

• Financial Mismanagement

Inadequate funding can limit a lender’s ability to grow and withstand economic challenges. Inefficient expense management can erode profitability and hinder growth. Insufficient financial forecasting can lead to cash flow shortages and operational difficulties.

To avoid these pitfalls and build a successful lending business, consider consulting with industry experts or leveraging specialized financial services to conduct a comprehensive business model assessment.