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Loan apps loyalty dips on debt recovery methods

By Peter Theuri | February 2nd 2020

The approach by mobile lending apps towards customers during debt recovery has led to client apathy, according to a survey by research firm Ajua.

The study noted that digital loans comprise 50 per cent of the loans issued in Kenya and have doubled over the last two years.

Mobile loans are easier to subscribe to and their quick processing attractive. However, customers face a torrid time when they are late to pay back.

“In the long run, the methods of debt recovery ranging from intrusive calls to aggressively texting loanees multiple times in a day are both ineffective and unsustainable for lenders as such tactics often lead to a high churn rate and loss of revenue,” said Ajua in the study report.

“To prevent this from happening, mobile money lenders need to improve their customer experience and be compliant with the Data Act of 2019.”

When choosing a digital loan provider, customers consider interest rates, repayment duration and period of loan disbursement, the report said.

“However, customers are caught unawares when they are subjected to punishment for defying rules they had not seen, most of them details hidden in a long list of terms and conditions.”

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