“Our corporate social investment in Nigeria focuses on financial literacy” says RenMoney CEO

RenMoney is a consumer finance organisation that came in to the consumer finance market in 2012 with the objective to build reputation for offering great financial value, ease of use money solutions and transparency of transaction. In this interview, its CEO, Graham Lee  plans to increase his branch network from 5 to 11 next year. He believes that RenMoney will have sustainable business in the future with greater level of financial literacy in the country. Excerpts.

Could you explain what RenMoney is all about and its objectives?

RenMoney is a consumer finance organization. Our mission is to lead consumer finance in Nigeria through the provision of simple money solutions.   Our products are really simple and easy to use and easy to understand by our customers. These aspects are important to us. They are solutions that add value to customers’ lives.

What differentiates you from other microfinance businesses?

There is a great deal of overlap. We operate under microfinance bank license in Nigeria. To understand our mission properly, it is to lead inclusive consumer finance. So there is very significant overlap between that and traditional microfinance. Where we differ slightly is that while our products can be seen as microfinance banking products, they are offered to individuals and not companies or SMEs. We deal with individuals and we provide them with simple solutions based on their precise needs. We also offer individuals saving products and fixed deposit investments and products. We provide loans to individuals. We don’t deal with corporate organisations and we will never deal with them.

Could you explain more about some of those products?

We have on the saving side, simple target savings account. This is a product designed for individuals to save towards a specific goal. We also offer very competitive interest rate at a flat rate of 10 percent per annum. In conventional banking, this is not normally available to small scale savers. This rate is available to only people with a large amount of money who are able to fix their money or buy treasury bills. But in our case we are talking of people who are able to save a small sum of money each month. We also have fixed deposit products. These cover people with big money to save, who see it as a longer term investment. They are not saving towards a specific goal, but they are saving for a longer period of time such as retirement. These products are very simple and transparent to the client. We can agree on the term based on the client specific requirement. We offer terms from 60 days to a year. We publish our rates and make it transparent as much as possible. We also offer simple cash loans to individuals with different needs. People usually need quick access for cash loans and we provide unsecured loans to them.

What are the major reasons tendered by those who take these loans?

There are loans for individuals earning less than N50,000 and they are mostly used for urgent needs such as school fees for their wards. And we provide short term funds to meet their needs.  We also provide start up capital for self employed people whose businesses are duly registered with Corporate Affairs Commission (CAC). In start up’s, sometimes there is a barrier to entry which is finance; we provide the funds to them get in to the game. We also provide cash loans for a wide range of individuals used for purchasing appliances, house furnishing and others. We also provide finance to self employed individuals in different trade to expand their businesses. Despite the fact that we are serving different types of clients, there are a few things that are the same – they are individuals and our format is the same, fast, cash loans.

How do you manage your risks?

We have different assessment mechanism in our back-end. There is complexity in the business but it is managed using our risk management analytics systems.  Before we grant the loans we have an external analytics team who review applications very quickly. We have built a very significant risk prediction model that segment clients in to different classes. This makes us to understand the client. We also make sure we understand the individual and we track their cash flows and verify their employment address by visits to reduce the risk of fraudulence.

Even if you get all these correct, there could be other challenges, do you agree?

There are always challenges. We are in a business of taking risk. We understand it. We are not trying to avoid it or manage it completely but what we are doing is to optimize the risks we take and make sure it is properly priced, that is, receive compensation for each individual risk that we take. Again once the loan is granted, we make sure we stay in constant contact with the person, we do not wait until there is a problem, we continue with the relationship and understand when our client is in difficulty and why.

Presently, what is the level of default?

Presently we are coming under 9 percent lost of volume. This means that for every naira that is given out, we lose about 9kobo to credit risk. That is our target and we are meeting it.

What would you say are your short and medium term goals?

Let me start with long term objectives, as it will make what we will achieve in the mid and short terms clearer. As I said, our mission is leading inclusive consumer finance solutions. These are not just statements; they are key aspects that we believe in. Our vision is to be the foremost consumer organization in Nigeria. And we are trying to get there quickly. We are building something special here. We are investing heavily in our location and people and the brand. This is an industry that can be rationalized in a few years time. There are some players that will go out of business and they will be replaced by other players. We intend to be here for the long run and are building a strong foundation for the business.

Could you talk about Renmoney trajectory since it came in to the market in 2012?

Honestly we had two false starts. We are essentially on the third experiential business model that we have been operating in the last one year.  Our trajectory growth is very strong. This month our loan is in excess of N430 million when compared with what we had in January 2015 which was N112.5 million.

How do you think RenMoney will assist the government in financial inclusion?

We support financial inclusion in two broad ways. We offer savings to individuals who might not be included in conventional financial services , that is  people without bank accounts who have the need to save but have never trusted a bank or seen the value in opening a bank account because they have not seen the return for their small amount of money. Because we offer significant interest rate and make it simple to open, those kinds of people open account with us. For those kinds of individuals, we are the door way to financial services they will have. Secondly, there are many people who may have bank account but credit is not available and we offer credit to them. Because we are committed to the long term here, our corporate social investment is focused on financial literacy. With the kind of business RenMoney is into, the saving product type and loan side of business will be in a stronger and more sustainable position in the future if the population of Nigeria generally has high level of financial literacy. This is because people will understand the importance of saving and people who borrow will understand what it will mean in the long term if they default and understand that the cost of default is higher than making the payment.

What financial planning advices would give to your customers?

The starting is to start planning. The problem is not planning and doing badly, the problem is actually not planning. The first step is to create a plan. Sticking to it is the second step. The third is to save, no matter how small and find the best value account with high interest rate and be consistent with your savings.