Brace For The Lending “App-o-calypse”
Ever heard of any or all of Tala, Aella Credit, Paylater (Carbon), FairMoney, QuickCheck, Zenka, OKash, OPesa, Renmoney, PalmCredit, and the likes?
What do all those have in common besides being quick loan apps built for Africans that can be gotten for free on Google’s Play Store? Answer: They can’t be found on Apple’s App Store. (Go ahead, check, I’ll wait). Coincidence? Not much.
So what’s up with all those apps and not wanting to touch iOS devices with a ten-foot pole? Or is it that there is some animosity between Apple and quick loan apps tailored for Africa?
Well, at least, the experts tell us there’s more to it than being unable to see any merit in expending resources building apps that sell micro-loans to people who already have a thousand-dollar device in their hand.
Yes, that’s kind of the word on the street for why many of the popular lending apps that we have come to know are not available for iOS devices.
Don’t get it twisted: there are a number of African lending apps on App Store, just not the popular ones that one would expect. And the reasons for this touch on policies and targets for the parties on either side of the divide.
App Store versus Play Store
It was only a couple of weeks ago when Opera, the Norwegian company currently owned by a Chinese consortium, was rocked by allegations of dealing-in-bad-faith with regards to its methods of disbursing micro-loans through its lending apps in Nigeria, Kenya, and India.
In a report titled: “Opera: Phantom of the Turnaround — 70% Downside”, Hindenburg Research, a US-based forensic financial research firm which has since confirmed shorting Opera’s stock, suggested that OKash, OPesa, and CashBean are violating Google’s rules for lending apps and are living on borrowed time.
Hindenburg Research supplied evidence to claims that Opera’s ailing browser business had necessitated a pivot to fintech and the company was now rebounding off the back of lending apps that adopt shylock, predatory methods to rope users in and milk them for every penny they’ve got.
Google was not left out of the crossfire. Although the company had updated its Financial Services Policy months prior to reflect zero tolerance for personal loan apps that require repayment in full in 60 days or less from the date the loan is issued, many were left wondering if the new policy is mostly hollow and cosmetic as the apps are still on Play Store.
And that’s because Opera’s lending apps aren’t even the only ones that seem to be violating the policies that supposedly guide the platform upon which most African lending apps are featured — Google’s Android. Actually, now would be a good time to highlight why many African lending platforms would rather not build an iOS version for their apps.
Think Market Share, Think Reach
For all of Apple’s increasing popularity in Africa — especially as a status symbol — the continent remains one of the markets that are least important or relevant to Apple, apparently.
In these parts, Google is king and Android is its beloved child. Google’s Android is the leader in the mobile operating system market in Africa. As of December 2019, it accounted for almost 84 percent of the mobile Operating System (OS) market.
In Kenya, where there are up to 49 micro-lending platforms and where four out of the top ten free apps are fintech apps offering free loans — something that has seen digital loans become a sort of debt trap — Google/Android has over 84 percent market share.
In Nigeria, where digital loan platforms are sort of metastasizing at the moment, its market share is nearly 80 percent.
With the facts laid out above, just about anyone can put two and two together as to why most microlenders choose to distribute their product by building apps for Android and taking advantage of the growing smartphone/internet penetration in places like Africa.
This sentiment is one shared by Adia Sowho, VP of Growth African lending startup, Migo, who told WeeTracker that building lending apps for Android easily makes more business sense while suggesting that there’s even more merit in building USSD gateways for feature phones.
“Data on mobile phone ownership in Africa shows that Android is the most popular smartphone OS so it makes sense to start there,” said Sowho in an emailed response.
“Beyond the OS-specific apps, however, there are USSD-based solutions, which actually have the widest reach and cuts across all phone types. Individuals can also access credit online via USSD, making it easier to serve customers with or without access to smartphones.”
Sowho, who has been instrumental in helping Migo underwrite more than 7 million mostly under-banked customers to-date and securing expansion into South America via Brazil, also hinted at reasons bordering on a certain demographic.
“I think it is less about avoidance [of iOS] and more about prioritising the quickest path to business growth. iPhones typically cost around USD 1 K, which paints a picture of what it’s typical users can afford. However, this doesn’t exclude them from needing credit. Just that there are other demographics with more clearly-understood credit needs and clearer prospects for scalability.”
Think App Store Rules Too
The uptake of digital lending has been on the rise across Africa, buoyed by growing smartphone adoption, increased internet penetration and the availability of digital payment systems like mobile money transfer.
With quick application turnaround, digital credit has helped borrowers pay for basic necessities like food and rent and access working capital for their enterprises. Due to the bottlenecks associated with accessing credit from formal financial institutions, lending apps have become a popular option for retail loans in Africa, which, coincidentally, is dominated by Google.
And that’s why many lending platforms build Android apps for Play Store while appearing to ignore the relatively small though potentially profitable market that comprises iOS users.
But this is not the only reason. Come to think of it: payday lenders would surely not mind building iOS apps for App Store if they could. But the truth is that they couldn’t even if they wanted to.
For them, it’s like what the character Sheldon Cooper (played by Jim Parsons) says in one of those many hilarious episodes of The Big Bang Theory: “If I could’ve, I would’ve. But I can’t, so I shan’t.”
Most African payday lenders can’t build for iOS even if they wanted to because of how Apple handles app permissions. In this case, it becomes less about market size and more about the fact that most of the quick loan apps that we have come to know wouldn’t be fit for iOS because they require certain permissions that Apple does not give. And such permissions are fundamental to how many payday lenders operate.
Here’s some food for thought: There are reports from last year that showed how Okash, for instance, went as far as calling people on the contact list of a delayed or defaulted customer in order to recover their funds. Yes, this happens more often than not and with many of these lending platforms.
And how does OKash access data on the contact list of its users? Simple. Google allows them to. But this is not the case with Apple which seems to be one of the most trusted tech brands when it comes to data privacy.
Apple would never allow OKash to pull such a stunt. Actually, with such practice ingrained into its operations, OKash can’t even get on the App Store, to begin with.
As written in Apple’s guidelines for apps that are to be featured on App Store, one of the requirements for apps that are approved are that they “do not contact people using information collected via a user’s Contacts or Photos, except at the explicit initiative of that user on an individualized basis.
The guidelines also state as follows: “do not include a Select All option or default the selection of all contacts. You must provide the user with a clear description of how the message will appear to the recipient before sending it (e.g. What will the message say? Who will appear to be the sender?).”
That is to say that the lending apps that get approved on the App Store are those ones that do credit rating and methods of loan recovery differently, according to Apple’s policies on data privacy. And some of our “faves” would rather not deal with that at the moment.
Featured Image Courtesy: Devex