The need for quick and easy access to credit is always been a real need for borrowers with urgent requirements. However, when someone needs urgent financial assistance, they tend to ask family and friends or other close circles for help rather than go through the process of applying for a bank loan. It remains the preferred way for most people to get quick cash.
Over the years, the experience I have gained as a banker has shown me that much of this credit is for emergencies that require quick money, including medical bills, school fees and utilities among other personal needs. While banks have always offered the lending option, which is essentially their core business, getting a loan can be a lengthy process especially in the event of emergencies or any other urgent needs.
Usually processing a loan can take between one and six weeks for a bank to evaluate and decide on a client’s application. Some banks may take a shorter period depending on the kind of facility the client wants. Admittedly, it is not unusual for banks to ask for more information once the application has been submitted as they undertake the due diligence process. So, the sooner the client can provide the information and collateral, the faster the application will be processed.
However, in desperate times borrowers resort to money lenders which isn’t the wisest option. They are unregulated and this also means they can charge exorbitant rates which may cripple the borrower and in the long run leads to them losing their collateral.
But with the new digital age, digital banking has enabled millions of people to access banking services. Today, banks can offer access to quick credit using digital platforms. For example, Stanbic Bank Uganda recently carried out a survey that confirmed customers most often require money to pay for a pressing domestic expenditure. From these findings, Stanbic has come up with the Instant Cash Advance solution that can be accessed physically from Stanbic Bank’s Mobile and Online Banking platforms or from any of their branches.
The Instant Cash Advance is a 30-day short-term cash overdraft offered to Stanbic Bank customers available on Online Banking and Mobile Banking (*290#). The money can be used for emergency personal expenses like, paying school fees, urgent medical bills, car repairs, fuel and the like. The product allows customers to access a pre-approved limit of between UGX140,000 and UGX2 million. The bank does not charge an interest rate, but rather a service fee of 7% is deducted upfront and the loan is repayable within 30 days.
Consumers are increasingly demanding for simple lending solutions with good and flexible turnaround times. Therefore, there is room for traditional banks to use Digital Banking to address this demand and make credit more accessible to customers. In addition, banks should capitalize on digitization in order to build scoring models that utilize customer data and provide more accurate and consistent risk assessment of customers, making the credit process faster and more efficient.
Editor’s Note: This is an opinion article written by Damalie Nankya; Head of Lending products at Stanbic Bank Uganda