As profitable as Nigeria’s consumer lending space appears to be, many fintechs are crumbling under the weight of delinquent loans. As a result of this, loan recovery teams are becoming larger, yet this presents its own set of challenges. Not only do large loan teams chip away at the profits of the fintech lending companies, they are also prone to several types of risks.

There’s the risk of rising remunerations, which erode profit margins. There’s the risk of hitting a dead end when the defaulters disappear without any trace. There’s the hidden cost of the logistics involved in seeking out defaulters.

There’s the emotional drain resulting from the fallout of aggressive confrontations between creditors and lenders. There are potential reputational and legal risks in the event that the actions of the credit companies are construed as intimidating the lender. There’s the risk of parties getting hurt due to the confrontation. There’s the risk of destroying relationships.

The exponential growth in Nigeria’s fintech lending landscape has brought about complexities that manually driven loan recoveries cannot keep up with. Due to the limitations of the debt manual collection system, the fintech industry needs a scalable, tech-enabled, data-driven approach to match the growth in the credit lending ecosystem.

From Field Agents to AI: Mida’s 360° Recovery Model

Mida Technologies, a leading financial services provider that leverages AI-powered ethical debt collection and recovery solutions, is driving the digital transformation wave aimed at disrupting the sometimes inefficient loan recovery systems.

One of the biggest challenges confronting credit companies is the disappearance of lenders. Around 45 percent of loans are not recovered. Many simply disappear into thin air when they change addresses or jobs or relocate, and the absence of a Nigerian data repository makes it difficult to track them.

MidaX

Mida can help locate customers who have changed contact details or are intentionally taking steps to avoid getting found. Through its MidaX proprietary digital skip trace technology, Mida is able to find ‘lost’ lenders. MidaX automates the search process by quickly identifying the borrower’s footprints.

Mayowa Anibaba, co-founder and Chief Executive Officer of Mida Technologies, describes it as a significant breakthrough in loan recollection in Nigeria’s credit system.

“The probability of recovering a delinquent loan increases by up to 55 percent once defaulters can be located. By helping field recovery teams find customers in their current locations, MidaX dramatically increases the likelihood of successful debt collection. And when customers know they can be found, it discourages the prospect of trying to disappear. The revenues of credit companies will be positively impacted in the long run,” he said.

Mida’s blend of tech and human infrastructure helps fintechs scale their operations across several fronts. The reliance on field debt recovery officers toiling the fields to recover loans and sometimes putting their lives at risk is greatly minimized. Significant costs are saved through reduced travel time and expenses, logistics and salaries, and even potential lawsuits.

MidaOmni

Mida’s suite of innovative solutions also includes MidaOmni which is designed to allow financial institutions to manage productivity and coordinate the staff performance of their internal and external debt collection teams.

“Using MidaOmni, fintech lenders and commercial banks can leverage Mida’s CRM platform to supervise, monitor, and evaluate the performance and productivity of the internal and external debt collection units, including call centre and field agent teams. Real-time analytics and dashboards provide a snapshot of the performance of the debt recovery teams,” says Adija Uzodinma, co-founder and Chief Operations Officer, Mida Technologies.

MidaOmni is also designed to segment the credit portfolios of financial institutions into various predetermined categories and customize targeted actions for each group. This way, the lenders can adapt specific measures to every segment based on various criteria like risk, delinquency, and customer behavior, among others.

There are several other smarter, quicker, and more efficient avenues through which Mida can drive debt recoveries.

Predictive analysis

Through predictive analysis, Mida can predict consumer behaviour and flag borrowers who are likely to default and thereby activate proactive interventions. Mida utilizes data such as credit scores and past payment patterns to forecast default risk.

Adaptive rule engine

Based on its strategy of driving recoveries through tech and empathy, the company’s inbuilt CRM tool is able to modify its responses based on engagement with customers, offering empathetic messages to those whose algorithms reflect financial distress or firmer demands who have been determined to be financially evasive.

Artificial Intelligence

Through artificial intelligence, Mida can also help defaulters to develop a repayment plan. This is achieved through an analysis of the borrower’s financial data and credit score. Based on the assessment, the company is able to recommend affordable repayment plans tailored to peculiar circumstances.

Shift From Manual To AI-Powered Debt Recovery

Oke Egbi, co-founder and Chief Revenue Officer described Mida’s tech and automation-driven debt recovery approach as a seismic shift in debt collection.

“Our approach harnesses the existing loan recovery team structure of fintech lenders as well as the AI-powered technology-driven innovative solutions of Mida, leveraging advanced algorithms, automation, and data analytics to recollect debt ethically and efficiently. Mida’s tech-driven solutions represent both a key milestone, and the future of effective debt recovery,” she said.

Nigeria’s fintech sector has greatly evolved. The labor-intensive process of relying heavily on field recollection officers and manual-driven processes is not sustainable. The shift to innovative, tech-driven debt recovery processes championed by Mida leverages artificial intelligence, machine learning, and automation. The benefits of this include efficiency, reduced costs, and enhanced customer experience, resulting in higher debt recovery rates.