What is fintech lending?

Gone are the days of endless paperwork and bank queues when seeking a loan for your business and personal finance.

The tides have turned in Nigeria’s financial ecosystem, ushering in a wave of innovation called fintech lending.

This blog post is your comprehensive guide to explore this exciting technology, from understanding its core principles to exploring the top 10 fintech lending companies shaping the future of borrowing in Nigeria.

What is fintech lending?

So, what exactly is fintech lending? It’s a fancy term for using technology to streamline the lending process, making it faster, easier, and more accessible. Think of it as a digital bridge between borrowers and lenders, eliminating the need for physical branches and mountains of paperwork.


But what exactly is fintech lending? Put simply, it’s using technology to make borrowing faster, easier, and more accessible for customers. It acts as a digital bridge that connects borrowers with lenders, bypassing traditional banks and their lengthy processes.

How does it work?

Let me illustrate: you need a loan for a small business venture. With fintech lending, you can forget about piles of paperwork and endless visits to the bank. Instead, you can:

  • Apply online: Platforms like QuickCredit, Branch, and Carbon offer loan applications on their websites or mobile apps.
  • Get quick decisions: Advanced algorithms analyze your financial data (income, expenses, credit history, also known as credit score) and give you a decision within minutes or even hours.
  • Receive funds instantly: If approved, your loan is deposited directly into your mobile wallet or bank account, giving you immediate access to the cash you need.
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Benefits for Nigerians:

Fintech lending offers numerous advantages for Nigerians over traditional banking ecosystem, especially those who have traditionally faced difficulties accessing traditional credit:

  • Financial inclusion: Fintech platforms reach beyond traditional banking networks, making loans available to people in rural areas or with limited credit history. This empowers Nigerians to pursue their entrepreneurial dreams and improve their livelihoods.
  • Convenience: Applying for and managing loans online is incredibly easy and saves time. You can do it anytime, anywhere, from the comfort of your own home as long as you have internet connection.
  • Transparency: Fintech platforms are typically more transparent about fees and interest rates, allowing you to make informed decisions about your borrowing.
  • Competitive rates: With more lenders competing for your business, you can often find better interest rates compared to traditional banks.

What is the difference between bank lending and FinTech lending?

Bank vs. FinTech Lending in Nigeria

FeatureBank LendingFinTech Lending
Institution TypeTraditional, established financial institutionsTechnology-driven startups or companies partnering with banks
Loan Application ProcessPaper-based, often requiring physical visitsMostly online, with easy-to-use mobile apps
Eligibility RequirementsStricter, often relying on traditional credit scores and collateralMore flexible, considering alternative data like phone usage and financial transactions
Loan AmountVaries greatly, potentially higher for larger loansOften smaller loan amounts, focusing on microloans and personal loans
Interest RatesGenerally higher, reflecting higher operational costsCan be lower due to lower overhead and data-driven risk assessment
Approval TimeSlower, potentially weeks or monthsFaster, often within days or even hours
TransparencyFees and terms may be complex and hiddenUsually more transparent with clearer fees and terms outlined upfront
Customer ServicePersonal touch through physical branchesPrimarily online or app-based support
Additional ServicesBundled with other banking products and servicesMay offer limited additional services beyond the loan itself

In-Depth Details:

  1. Application Process: Banks often require extensive paperwork, guarantors, and physical visits, making the process tedious. FinTech platforms, on the other hand, boast convenient mobile apps and streamlined online applications, simplifying the process significantly.
  2. Eligibility: Banks base decisions heavily on traditional credit scores and collateral, potentially excluding underbanked individuals. FinTech, however, embraces alternative data like phone usage and transaction history, providing access to those with limited credit history.
  3. Loan Amount: Banks offer a wider range of loan sizes, including larger loans for mortgages or businesses. FinTech platforms mainly focus on microloans and personal loans, ideal for smaller financial needs.
  4. Interest Rates: Generally, bank interest rates are higher due to their operational costs and risk assessments. FinTech, using data-driven methods and lower overheads, can offer more competitive rates, especially for smaller loans.
  5. Approval Time: Bank loan approvals can take weeks or even months, involving multiple screenings and verifications. FinTech platforms boast faster approvals, often within days or even hours, thanks to automated processes and alternative data analysis.
  6. Transparency: Bank loan terms and fees can be complex and hidden within lengthy agreements. FinTech platforms prioritize transparency, presenting clear fees and terms upfront, empowering informed decision-making.
  7. Customer Service: While banks offer the personal touch of physical branches, FinTech relies primarily on online support and mobile apps. However, some FinTech companies are building hybrid models combining online convenience with physical touchpoints.
  8. Additional Services: Banks often bundle loans with other banking products and services. FinTech platforms may offer limited additional services beyond the loan itself, although some are expanding into wealth management and other financial areas.
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What is the difference between FinTech and digital lending?


FeatureFinTechDigital Lending
ScopeA broad umbrella term encompassing all technology-driven innovations in the financial services industry. Think mobile banking apps, crowdfunding platforms, peer-to-peer lending, robo-advisors, blockchain solutions, and more!subset of FinTech focused specifically on online loan applications and disbursements. Think instant payday loans, mobile loan apps, and alternative lending platforms.
PlayersDiverse range of actors, including startups, established financial institutions, technology giants, and even non-traditional players like mobile network operators.Primarily startups and alternative lenders, along with some traditional banks offering digital loan platforms.
GoalsDisrupting traditional financial services, improving access and convenience, leveraging technology to offer new products and services, and making finance more inclusive.Simplifying and speeding up the loan application process, expanding access to credit for underserved communities, and potentially lowering borrowing costs.
Impact in NigeriaDriving financial inclusion through mobile money initiatives, facilitating cross-border payments, offering innovative investment options, and promoting financial literacy.Increasing access to finance for small businesses and individuals, offering quick loan solutions for emergencies, and potentially reducing reliance on informal lenders.
ChallengesOvercoming regulatory hurdles, building trust in new technologies, ensuring data security and privacy, and addressing financial literacy gaps.Managing credit risk in unbanked populations, preventing predatory lending practices, and ensuring responsible borrowing habits.

Top 10 Fintech Lending Companies in Nigeria

1. ALAT by Wema Bank:

What is fintech lending?

ALAT is a fully digital bank offering a range of loan products, including personal loans, salary advance loans, and merchant loans.

Known for its user-friendly app and swift approval process, ALAT caters to both individuals and businesses with over 1 million download on Google play store

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2. Carbon:

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Carbon is a leading mobile loan platform, providing small instant loans to users through their Android app.

Their focus on micro-loans and short-term repayment periods makes them a popular choice for everyday expenses and emergencies With over 1 million download on Google play store.

3. M-Pesa (M-Shwari):

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M-Shwari, a product offered by mobile network operator Safaricom, allows M-Pesa users to access instant loans directly through their phones with over 10 million download on Google play store.

Its popularity stems from its convenience and accessibility, even in rural areas with limited banking infrastructure.

4. Branch:

Screenshot 20240129 120601

Branch is an AI-powered lending platform known for its unique credit scoring system that goes beyond traditional credit bureaus.

This makes it accessible to individuals with limited credit history or those who rely on alternative financial data with over 10 million download on Google play store.

5. QuickCheck:

Screenshot 20240129 120751

QuickCheck offers various loan options, including payday loans, school fees loans, and asset-backed loans.

They are known for their flexible repayment plans and commitment to financial literacy through educational workshops with over 1 million download on Google play store.

6. Renmoney:

Screenshot 20240129 120908

Renmoney specializes in salary advance loans for salaried individuals. Their focus on verified employment income ensures faster approvals and competitive interest rates with over 1 million download on Google play store.

7. Kuda Bank:

Screenshot 20240129 121347 1

This digital bank combines banking services with lending options. Kuda offers personal loans, savings accounts, and investment products within a user-friendly mobile app.

8. FairMoney:

FairMoney offers personal loans with flexible repayment terms and competitive interest rates. Their focus on transparency and financial education sets them apart in the market.

9. Palmcredit:

Screenshot 20240129 121621 1

This Fintech platform provides microloans for short-term needs. Their easy-to-use app and instant approvals make them a convenient option for emergency cash needs with over 5 million download on Google play store.

10. Aella Credit:

Screenshot 20240129 121929

This platform focuses on providing loans for women-owned businesses. Their flexible loan terms and mentorship programs empower female entrepreneurs to achieve financial success with over 1 million download on Google play store.

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