Founder and CEO of P2Vest, a financial intermediary that ensures fair, simple and easy access to both individual and business loans, Austine Abolusoro, speaks on the growth of the fintech industry, its impacting on the Nigerian economy and how P2Vest helping to drive financial inclusion in Nigeria. Eromosele Abiodun presents the excerpts
How will you describe the growth of Fintech companies and their impact on the Nigerian economy?
We can say that the growth in the fintech industry is impacting Nigeria’s economy because investments coming into Fintechs are coming into Nigeria as well. In terms of employment and production of useful products for the economy, we have seen a positive growth..
P2Vest is one of the many Fintech companies that is driving innovation in the digital lending industry of the Nigerian economy. How has P2Vest helped in driving financial inclusion in Nigeria?
Financial inclusion is essentially a movement aimed at encouraging people to join the financial system by opening a bank account or owning a wallet, consequently providing them with financial benefits.We offer credit as a financial product at P2vest by providing a digital platform whereby the users can borrow or lend money, which can only be done with the help of a bank account or wallet. We are simply enhancing the options for the finacially included people. You will agree with me that Financial Inclusion without access to Credit will lead to Financial Frustrations.
What specific challenges does P2Vest seek to address in the digital lending industry and what are the specific solutions developed by P2Vest to address such challenges?
P2vest is set up to provide lending and borrowing services through a peer-to-peer platform. Looking at lending today, we’ve been able to provide a platform that addresses the credit gap as well as solves the problem of accountability for some people. Our latest product on the platform, which is the BailMe, allows friends or individuals to lend money to each other with or without charging interest. Overall, we are trying to address the accountability challenge, and with a platform like ours, there is more assurance of getting your money back with the option of charging interest . Also, we are solving the credit challenges faced by many SMEs by providing P2vest for business, a feature targeted at SMEs. We are looking to launch other services that would bridge different gaps that exist in the financial system.
As a peer-peer lending platform for lenders and borrowers, how do you ensure credible lenders do not lose money to fraudulent borrowers?
We strive to keep fraudulent borrowers away from our platform as much as possible using P2Vest technology. Before providing a borrower access to a lender, we perform various processes and checks from our end on our platform. To ensure that the person is neither a fraudster or a defaulting borrower, we run BVN checks, background checks, account validation checks, and credit bureau checks, to name a few.There’s also credit scoring, where a user gives us their bank account statement and we obtain it directly from banks to verify the transactions so we don’t have to deal with bogus statements.When borrowers refuse to pay or are late, we go to the bank and debit their account, attempt to debit the funds from the account provided to reclaim the lender’s funds. If that fails, we issue reminders and take other steps. We don’t share the borrower’s information with third parties in this way, but we do send notifications to borrowers and their guarantors to remind them to pay as a part of their obligations on the platform.
5What are the criteria and conditions for borrowing and what is the highest amount that a borrower could get from the platform?
The first criteria to borrow on our platform is to have a BVN and a phone number and to borrow successfully one has to meet some minimum requirements and a minimum credit score of 50/100. We run a tier system on the platform which helps borrowers know what they are eligible to borrow, so a borrower can be moved from one tier to another if he/she has paid off their last loan and meets the requirement for the next tier.
Who bears the financial risk, should a borrower default within the given period of the transaction?
Well, while we provide the platform and help with the recovery of loans from a borrower, the lender bears the financial risks. Lenders on the platform are not compelled to lend money to a borrower, we provide necessary details to help them make a decision. The decision to lend is solely that of the lender.
Most Fintechs are looking for willing investors to invest and grow their business. Are you thinking in that direction anytime soon?
Every fintech at some point would require some investments to upscale and grow their business. With the P2vest platform, we are at a stage where we are looking at scaling our business and so we would be looking to to engage with investors that would help us achieve that.
What is your view about the planned government regulation of the Fintech sector, given the fact that regulating emerging technologies could stifle business growth?
Presently, the Financial sector has a plethora of services available, and regardless of what you play, there is already some type of regulation in place. When it comes to Fintechs that provide banking and payment-related services, the central bank has put in place requirements and certifications that they must meet in order to operate in certain areas, such as switching, payment gateways, and so on. Regulating the fintech business is a broad statement, but let’s narrow it down to regulating the digital lending business, which is an area where many Fintechs are active and which has recently sparked some worries by offering digital loans that are different. The experiences so far has been a lot of violations and breaching of end-user privacy, it is necessary to put in some kind of regulation but so long as the government and regulatory authority can be magnanimous enough to allow people to make inputs and not come up with draconian laws that will totally hinder innovation. I think it will be for the good of all.
What is the current population of lenders on your platform and how do you intend to further grow the number in the next two years?
On our platform, we have over a thousand lenders and the general number of users and borrowers is well over a hundred and twenty thousand. We are now in conversations to onboard some groups of SMEs to also come on our platform to lend.
You are into a business with a high-risk factor, where hackers are busy looking for loopholes to hack into organizations’ networks. How secure is your platform in protecting the interests of lenders and borrowers?
Information security systems is something we take very seriously at P2vest and so it’s safe to say that having some experience and background in security is a great advantage as it has enhanced the design and management of the P2vest platform in knocking out hackers. Having said that, no system is a hundred percent secured, it all depends on the types of control and monitoring that are in place which is exactly what we are doing. We continue to monitor the system and when we see suspicious activities, we deal with them with a sense of urgency.
How flexible and easy to use are your app and platform to market women, who may not be technology savvy?
The P2vest app is simple to use but we are quite aware that there are different levels of literacy and there may be people that might not understand how to use the app. We are looking into this and bringing in a new option of requesting for a loan on our platform either through USSD or some other means. Those are features we are working on right now.
What are some of the challenges of doing business in Nigeria and how were you able to overcome the challenges?
The challenges of doing business in Nigeria are numerous and very clear to everyone. We have a very unstable exchange rate system in terms of foreign exchange. This impacts businesses because many of the services we use are subscribed in foreign currencies. A common challenge we face in the country is that of untruthful people who only want to take money and not pay. I think it is a challenge in our nation that we don’t have a strong way of compelling people to pay and this is one of the reasons why you see some lending companies taking the law into their own hands by taking some of the steps people are criticizing today. Imagine we have a credit system so strong that people know when they take a loan and do not pay it affects so many other things around them, so they are very careful to make sure that they do not default. Electricity is another major challenge for a startup like us but we have learnt to live with it.
Startups are full of ideas, but 95 per cent of such ideas do not come out successful. What could you say are your survival strategies in the last two years?
The startup environment is very brutal, it is tough starting a business and sustaining it to grow is a major task but we have been able to weather this so far. There are two important resources to a startup: time and funds. The ability to manage both is very crucial. Efficient management of time and the limited funds you have when you start a business is very important to your survival as a startup. Another strategy I have found is to have magnanimous investors, investors that would give you some time to be able to run the business before insisting on profit is something a startup needs because you need the lead time to build your product and to grow your business. So, having the right kind of investors that would support you in your business, give you advice, give you the right kind of connections and also having the right team in place is very important. , I find these as survival strategies.
What is your advice for upcoming Fintechs and what kind of survival tips would you like to share with them, to enhance their business growth?
As an upcoming fintech, I would say have no boundaries, open your mind, go after and pursue that idea that you believe in. Put all your energy and resources into it. Don’t worry too much about mistakes, of course some are going to be made but learn from them quickly and from those that are ahead of you, don’t waste time on things that would not work, know exactly what you want to achieve and put all your energy behind that but don’t be afraid of making mistakes because in the process you could learn new things that would help you achieve your goals.