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Customers Cry Foul Over Harassment by Mobile Money Lenders

BY Soko Directory Team · February 6, 2020 09:02 am

A Customer Loyalty Benchmark released by Ajua has shown that customers in Kenya increasingly reported experiencing hostile treatment when being asked to repay their loans by mobile money lenders.

In a bid to recover debts, some lenders resort to continuous calling and prompting the customers to pay. In some extreme cases, these lenders go ahead and access information from their customers’ contact list prompting their contacts to push the loanee to clear their debt without their customer’s consent.

These measures by the mobile money lenders have made many customers feel their privacy breached.

In the long run, these aggressive methods of debt recovery are both ineffective and unsustainable for lenders as such tactics often lead to a high churn rate and loss of revenue in the process.

“To prevent this from happening, mobile money lenders need to improve their customer experience, stay competitive in the market and be compliant with the Data act of 2019,” says Ajua.

Digital loans comprise 50 percent of the loans issued in Kenya today and continue to grow significantly.

The report by Ajua cites that ambiguity in regulation continues to affect customer experience in the mobile loans industry.

Some of the biggest challenges faced by consumers according to findings made by Ajua are high interest rates, lack of information and breach of privacy.

With regard to high interest rates, the majority of the players in this industry have interest rates that are higher than those of traditional service providers i.e. banks that are regulated by the rate of Interest Act 2016. These interest rates also vary significantly from one provider to another

Quite often important information on the services are included in the Terms and Conditions which might be too long and difficult to read. Customers who are seeking emergency loans have no time to go over such T&Cs. Customers emphasised that they would like this information to be communicated clearly and upfront.

M-Shwari Most Preferred Mobile Money Lender

M-Shwari had the best customer experience owing to lower interest rates relative to competition, easily accessible loans and efficiency in loan disbursement.

Customers also appreciated the fact that they do not harass customers to pay their loans. In addition, these brands had transparency (no hidden charges), data privacy and clear terms and conditions.

KCB M-Pesa ranked second and was recommended for lower interest rates, easy accessibility and faster growth of loan limits.

Tala was recommended for its reasonable interest rates and repayment periods. However, customers cited harsh penalties and high interest rates upon defaulting as a reason for detraction.

Read Also: 82% Of Kenyan Youth Use Mobile Money For Gambling

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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