Ex-banker helps borrowers cut loan costs with online platform

When he was aged seven, Alex Magu would etch heads and tails of shilling embossment in his mother’s diary. Little did he know that money would define his career years later.

Although his mother would get angry with him for “spoiling” her diary, she told him that he would one day become a banker, recalls Mr Magu.

Thirty-two years on, he has risen from being head of finance at Family Bank in Nairobi to owning his own virtual credit marketplace dubbed CreditSawa.

The online platform, Mr Magu says, brings together borrowers and lenders to enable clients maximise on the value of their credit rating and worthiness.

CreditSawa obtains borrower information and presents it to a pool of lenders who then submit quotes for the credit sought based on rating.

Backed by an angel investor, he says that his knowledge and experience in heading finance and treasury operations convinced him that the future of financial services lies in both mobile and virtual technology.

“I have been in the financial industry for 15 years and saw the need for digital finance which CrediSawa provides. Sawa (Swahili for fine) means you get good deals on the platform.

“For lenders CreditSawa provides an inexpensive tool to access market segments that they cannot reach. It is a true startup having commenced in 2015 in Nairobi with a staff of two — myself and a sales or administration assistant,” says the father-of-three who has worked in the banking, insurance and telecoms sectors.

Mr Magu, 39, says he realised that not everyone benefits from credit rating. Therefore, he introduced another product — CreditDawa to serve this category of his clientele.

The “credit hospital”, he says, helps clients with aerse credit reviews to get remedy to improve their credit rating through a structured model, he says.

The business targets all categories of employees and other borrowers.

“We are segmenting our borrower population based on their unique credit needs and refining the matching technology to ensure optimum performance,” he says.

Mr Magu quickly adds that due to the need by some borrowers to realise value addition, CreditSawa has engaged third party providers to help the company operate more efficiently and enhance their rating tools for better credit management.

“We target anyone who borrows. Be it a teacher, a farmer, a business person or individuals.

“We have specialised credit rating tools per segment, hence clients are served uniquely,” he says.

Since inception in July, the entrepreneur says his Sh8 million investment has been able to sign up three local lenders, including Family Bank. About 100 borrowers have already subscribed to the platform in three months.

To access CreditSawa as a service, one is required to log onto the website and sign in as a new borrower at Sh100 annual fee. A credit report is obtained from one of the local credit rating bureaus at Sh100 annual subscription.

The credit report is uploaded on the platform in order for services to be tailored according to individual rating and needs, he says.

“For Sh200 every year you have a chance to save a lot of money in terms of interest and to get credit quickly.

“Once your credit report is filled out, you are at liberty to specify the kind of loan you want then sit back and get alerts from lenders with offers tailored to suit you. Once you accept an offer you will be directed to the lender to finalise the loan process,” says Mr Magu.

Greatest hurdle

The business is driven by technology using a programme that depends on quotes by signed up borrowers and lenders. His charges a commission equivalent to 50 per cent of every loan processing fee or 10 per cent of every loan granted through the platform.

The platform’s key source of profit comes from helping banks to get loan objection and originating tailored credit. Big banks also enjoy free customer service the platform provides on their behalf.

The businessman says this arrangement ensures client loyalty based on satisfaction derived from efficient service provision and speed of loan processing.

However, Mr Magu says setting up a successful online platform such as his CreditSawa is not free from start-up challenges.

His greatest hurdle, he says, was to get financial service providers with consistently fast and good credit processes that meet the needs of his customers.

“We continue to give our lenders feedback on process improvement to ensure they can win more customers,” he says.

Mr Magu has set his sights on becoming a credit reference point for central bankers and credit bureaus.

The former banker says that CreditSawa is a pan-African venture whose immediate plan is to expand in East Africa and become market leader over the next two years.

“Central Bank of Kenya has already issued us with a credit survey for every quarter on how credit officers perceive matters like loans.

“We will become an authority and eventually set the tempo in our dominant markets on how bankers should lend.”

Mr Magu says CreditSawa expects by the end of the year to double its customer base and portfolio of lenders.

smurumba@ke.nationmedia.com

SOURCE: BUSINESS DAILY