Nine months ago, Access to Finance Rwanda entered a partnership with the country’s sole Credit Reference Bureau – Transunion Rwanda.
The partnership came into force with a key objective to promote the use of credit scoring tools by financial service providers in determining borrowers’ credit worthiness, among other services.
At the centre of this partnership was how best the two parties can leverage technology to ease financial services, not just for the financial institutions but most especially the end users – loan applicants.
As such, the parties agreed to develop a mobile credit scoring platform known as Menyesha – meaning ‘inform me’.
As a pilot, the platform was designed, developed, tested and launched with a target to serve 8,000 users within a period of two years.
However, just nine months down the road, the target has been surpassed as the Credit Reference Bureau reports that 9,754 customers have already registered and used the application since it was launched in December, 2017.
This represents a 22 percent above target rate, with 15 months to go.
One may ask, then, is this figure (22 per cent) worth writing home about? Yes, it is for one key reason;
It’s not entirely upon how user-friendly and popular the application is.
There are other factors that come into play, the major one being that one has to need a loan from a financial institution before thinking about subscribing to the app.
Worth noting is the convenience that comes with this application, perhaps which explains the unprecedented number of subscribers within a short time.
The convenience is experienced not just on the demand, but also on the supply side of the financial products and services.
On the demand front, customers are able to access their credit status anywhere at any time instantly. On the supply front, customers are aware of their credit status before they can proceed to start the application process.
This saves financial institutions time and resources.
Generally across board, the app has emerged as an indispensable tool to incentivize good repayment behavior among debtors who work with local financial institutions.
Vision Fund Rwanda is one of the financial institutions that have embraced the use of the application while processing loan application for their clients.
Mr. Pacifique Mushimiyimana, a finance officer dealing with mobile banking and Credit Reference Bureau services at Vision Fund Rwanda, acknowledges that the application has made a significant difference in a very positive direction.
He noted that the duration for processing a loan application has significantly reduced, attributing it to easier and faster access to credit information via the mobile credit score application.
“Initially, clients used to make several trips in order to keep tabs on their credit status, which would delay the loan application process. Because now clients can access that information on their mobile phones, these unnecessary delays have significantly been cut,” adds Mr. Mushimiyimana.
Fixing the loopholes
Despite the achievement of the app since it was rolled out nine months back, there remains some gaps in terms of awareness of the benefits that clients can take advantage of.
In addition to AFR’s support to Transunion Rwanda (CRB) to educate the market, all the players in the financial sector should take it as their responsibility to educate its clientele about the benefits of having a healthy credit status.
For instance, most commercial banks offer loans at 19.5 percent interest rates with most customers thinking the rate is cast in stone. It is not.
In fact, depending on the level of health of a customer’s credit status, she or he can negotiate an interest rate as low as 16 percent.
This is the kind of benefits that should be communicated to the marketplace.
That said, the acting CEO of Transunion Rwanda, Mr. John Kabera, is upbeat about the technological innovations at the Credit Reference Bureau.
He says the mobile credit score application knocks the barrier off the path of Rwandans who want to have an improved customer experience through usage of digital financial services.
“Rwanda has much to gain by using financial technologies like Menyesha and other digital financial services. We should make the consumers of retail financial services leapfrog the traditional and analog banking systems, so we can increase convenience, affordability and high level of inclusiveness,” says Mr. John Kabera.
At AFR, it remains pertinent to partner with financial service providers including mobile network operators (MNOs) to extend digital financial services to deepen and broaden financial inclusion in Rwanda, especially low-income population.
That said and done, there is a lot of work that remains to be done with Menyasha (inform me) platform.
Whilst implementing the digital credit score platform, key lessons have been learnt over the months.
Good news is, a few key steps have been agreed upon as set out in this blog in subsequent paragraphs.
Mr. Gonzaga Nshizirungu one user residing in Kicukiro District, said that Menyesha platform is very helpful in terms of convenience in accessing one’s credit status.
“While using the application, I discovered that my credit health was deteriorating without my knowledge because I had two dormant bank accounts accumulating charges. Upon learning of this through my cellular phone, I approached the bank and closed them because I was no longer using the accounts. This prevented me from incurring unnecessary bank charges,” he said.
While stating the he has used the application twice and encouraged a number of people to use it, he hastened to point out that the application has many steps and a string of short messages (SMS) going back and forth.
The current version of the application is SMS-based, making it more expensive and at time complex to the end user.
Stakeholders have also acknowledged the shortcoming and agreed to develop and deploy of the USSD version of Menyesha.