Standard Chartered Bank is set to start issuing unsecured loans using a new method. The new method will see the bank track and analyse borrowers’ transactions dating back to 10 years, helping lock out those who do not meet its credit risk threshold.
“We continue lending in unsecured space …but with interest rate cap, we are cautious. We have invested a lot in technology and analytics and based on that, you can take a risk on certain kind of clients,” says StanChart head of retail banking David Idoru.
The fresh move by the bank will come as a relief to Kenyan households and small and medium enterprises who have been thirsting for loans since the introduction of an interest capping law in September 2016.
Currently, the majority of Kenyan banks have suspended unsecured personal loans due to a perceived higher risk of default.
“Because we have been keeping this (credit) data for 10 years, we can see the age, the company the person works for and the credit reference bureau data. A combination of these factors will show that a client of this age working for such an organisation will have a lower loan default risk,” says Idoru.
This was revealed during the signing of a partnership deal between StanChart and Visa. The rebranded scheme, dubbed 360° Rewards, will see the bank extend its loyalty points reward scheme, which has been available to credit cardholders for the last two years, to clients using automated teller machine (ATM) cards for shopping.
