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9 Pages«<45678>»
Mobile Loans Ponzi
tom_boy
#101 Posted : Sunday, January 20, 2019 11:17:10 AM
Rank: Member


Joined: 2/20/2007
Posts: 621
The number of Chinese peer-to-peer (P2P) lenders may fall by 70 per cent this year, as the nation intensifies its crackdown on riskier financing.

As few as 300 companies will remain by the end of the year, according to an estimate from Shanghai-based research firm Yingcan Group.

The number of operators dropped by more than 50 per cent to 1,021 in 2018 from a year earlier, Yingcan said, adding that there’s been no new entrants into the market since August.
https://www.scmp.com/tec...e-70pc-businesses-close

They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
tom_boy
#102 Posted : Sunday, January 20, 2019 11:26:38 AM
Rank: Member


Joined: 2/20/2007
Posts: 621
Chinese leaders are dramatically shrinking a market that spawned the nation’s biggest Ponzi scheme, protests in major cities and life-altering losses for thousands of savers.


Mobile loans are a form of Ponzi scheme. Like it or hate it. Just remember its your money on the line. When Eqwete and kcb are busy running a ponzi, its your money, the depositor, thats on the line.
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
tom_boy
#103 Posted : Monday, January 21, 2019 7:07:19 AM
Rank: Member


Joined: 2/20/2007
Posts: 621
https://medium.com/dfs-l...east-africa-844b217369fd
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
Angelica _ann
#104 Posted : Monday, January 21, 2019 8:04:31 AM
Rank: Elder


Joined: 12/7/2012
Posts: 9,999
KCB mobile loan interest charges is low & manageable, comparatively.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
freiks
#105 Posted : Monday, January 21, 2019 9:26:36 AM
Rank: Veteran


Joined: 6/8/2010
Posts: 1,614
Seems tom boy you are on your own explaining china, i thought you all applauded mark masai when he told uhuru this is not japan
Life is an endless adventure
tom_boy
#106 Posted : Monday, January 21, 2019 10:58:44 AM
Rank: Member


Joined: 2/20/2007
Posts: 621
freiks wrote:
Seems tom boy you are on your own explaining china, i thought you all applauded mark masai when he told uhuru this is not japan


Important investment facts

You dont have to be in a crowd to be right.

Sometimes, being too early ( in calling out a situation) is indistinguishable from being wrong ( Horward Marks.... I think...)
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
Angelica _ann
#107 Posted : Monday, January 21, 2019 11:19:10 AM
Rank: Elder


Joined: 12/7/2012
Posts: 9,999
tom_boy wrote:
freiks wrote:
Seems tom boy you are on your own explaining china, i thought you all applauded mark masai when he told uhuru this is not japan


Important investment facts

You dont have to be in a crowd to be right.

Sometimes, being too early ( in calling out a situation) is indistinguishable from being wrong ( Horward Marks.... I think...)


We might get there but we are far from it. The mobile loans are occupying the vacuum left by banks where they have refused to lend to wanjiku!!! I believe that there is a good percentage who are taking the loans to employ the cash in generating more cash not just consumption.

Time will tell.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
MaichBlack
#108 Posted : Monday, January 21, 2019 12:10:25 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,220
Angelica _ann wrote:
tom_boy wrote:
freiks wrote:
Seems tom boy you are on your own explaining china, i thought you all applauded mark masai when he told uhuru this is not japan


Important investment facts

You dont have to be in a crowd to be right.

Sometimes, being too early ( in calling out a situation) is indistinguishable from being wrong ( Horward Marks.... I think...)


We might get there but we are far from it. The mobile loans are occupying the vacuum left by banks where they have refused to lend to wanjiku!!! I believe that there is a good percentage who are taking the loans to employ the cash in generating more cash not just consumption.

Time will tell.

And someone cannot accuse banks of being too strict in lending/not lending and lending carelessly in the same thread. He has to make up his mind!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
MaichBlack
#109 Posted : Monday, January 21, 2019 12:16:17 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,220
rwitre wrote:
MaichBlack wrote:
rwitre wrote:
MaichBlack wrote:
Angelica _ann wrote:
MaichBlack wrote:
Angelica _ann wrote:
Kenya's Safaricom's overdraft service exceeds expectations -CEO https://af.reuters.com/a...fricaTech/idAFL8N1ZH32N


A billion in 8 days!!!


This is crazy innovation. Yet more must be in the pipeline. This is a strong company.

True. Kudos to them.

Then some fellows start saying it is too big sijui bla bla bla nonsense and needs to broken up!


Well at least someone has figured out how to milk money from Wanjiku.

KRA keep brainstorming.
Banks keep loaning to the government and complaining anga sijui rate cap.



Sio "anga"!!! Just pure commonsense. Why should I lend to you and your business at 14% with all your risks and logistics nightmare when I can lend to the government at an average of 13% depending on the instrument!!??



Fast forward 10 years:
Safaricom:
- Has an iron grip on the telecommunications industry.
- Has a loan book equal to or bigger than Tier 1 banks
- Is the largest home security provider in the Eastern Africa region
- Has a cash flow larger than the GoK Treasury

We're a capitalist economy. Your goal is to make money in spite of the prevailing market conditions. You can innovate and offer new products, or keep sitting on piles of cash "because it is too risky to lend it out".

Banks are not sitting on cash. They are just deploying it more sensibly and profitably while being cognizant of the risks vis-a-vis income.

And this is nothing new. Even small scale business people know this stuff. There are businesses that don't sell items you would expect them to be selling because of careful analysis - profit margin, how fast you can move the items, risks etc.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
bwenyenye
#110 Posted : Tuesday, January 22, 2019 2:18:39 PM
Rank: Elder


Joined: 5/24/2007
Posts: 1,782
Good people,

These are very great arguments on either side.. My few observations

1) The mobile loans are here to stay and they fulfill a certain part of the financial deepening circle. Convenience, not cost, is their critical success factor for now. Cost will come much later

2) These loans, like all other loans, will build many and destroy others. It depends on how one chooses to use them. Heck, there are guys who bet for a living and you'd be surprised the kind of turnovers they do. Forget the Jack pot guys

3)It is true that like all lending, mobile loans need proper regulation especially if it can hit Ksh8B in a month from one platform. We can imagine the impact and pervasiveness of the sector.

4) The biggest risk is that the small businesses,with short cycles and not so large investments are usually the most vulnerable to social hits e,g riots.. But that can always be mitigated by insurances

Finally, I see this a a new step in the evolvement of the financial sector. First, Kenya had foreign banks, then Nationally owned banks came in and they limited the licencing. To cater for the unmet market and especially for SMEs then, they formed Finance houses ( the likes of I&M, ABC, etc).At one point, these were also granted banking licences and the have done a dime well for themselves. When the licencing was stopped, we saw the growth of MFIs... and now we see Micro lending platforms... In essence, banking is changing and it is for the better.

I like the innovation, it has its risks but it is surviving because it has more advantages than disadvantages. We just need to figure out how to mitigate the risks..
Do not think inside the box. Neither think outside the box. You should remove the box and think free!!!! Peter Kenneth
Mike Ock
#111 Posted : Tuesday, January 22, 2019 4:09:38 PM
Rank: Member


Joined: 1/22/2015
Posts: 615
MaichBlack wrote:

Banks are not sitting on cash. They are just deploying it more sensibly and profitably while being cognizant of the risks vis-a-vis income.

And this is nothing new. Even small scale business people know this stuff. There are businesses that don't sell items you would expect them to be selling because of careful analysis - profit margin, how fast you can move the items, risks etc.


Yes, but banks have so far struggled to come up with a credit scoring method for the lower end of the market. Safaricom has created that using MPESA technology. If banks had somehow tried to get into the payments market earlier on(maybe through debit cards), they would have had good credit scoring methods and MPESA would be a fly in the soup. Now they own the credit scoring MPESA data and they are being very kind with it, giving it away for free. I would not be shocked if in future start charging loan apps a certain fee for MPESA data queries. Pay up or no paybill number for you.
Ericsson
#112 Posted : Tuesday, January 22, 2019 4:14:39 PM
Rank: Elder


Joined: 12/4/2009
Posts: 6,047
Location: NAIROBI
Mike Ock wrote:
MaichBlack wrote:

Banks are not sitting on cash. They are just deploying it more sensibly and profitably while being cognizant of the risks vis-a-vis income.

And this is nothing new. Even small scale business people know this stuff. There are businesses that don't sell items you would expect them to be selling because of careful analysis - profit margin, how fast you can move the items, risks etc.


Yes, but banks have so far struggled to come up with a credit scoring method for the lower end of the market. Safaricom has created that using MPESA technology. If banks had somehow tried to get into the payments market earlier on(maybe through debit cards), they would have had good credit scoring methods and MPESA would be a fly in the soup. Now they own the credit scoring MPESA data and they are being very kind with it, giving it away for free. I would not be shocked if in future start charging loan apps a certain fee for MPESA data queries. Pay up or no paybill number for you.


Kila nyani na soko lake,there is a mkt for banks and for safaricom fuliza
tom_boy
#113 Posted : Tuesday, January 22, 2019 5:11:18 PM
Rank: Member


Joined: 2/20/2007
Posts: 621
bwenyenye wrote:
Good people,

These are very great arguments on either side.. My few observations

1) The mobile loans are here to stay and they fulfill a certain part of the financial deepening circle. Convenience, not cost, is their critical success factor for now. Cost will come much later

2) These loans, like all other loans, will build many and destroy others. It depends on how one chooses to use them. Heck, there are guys who bet for a living and you'd be surprised the kind of turnovers they do. Forget the Jack pot guys

3)It is true that like all lending, mobile loans need proper regulation especially if it can hit Ksh8B in a month from one platform. We can imagine the impact and pervasiveness of the sector.

4) The biggest risk is that the small businesses,with short cycles and not so large investments are usually the most vulnerable to social hits e,g riots.. But that can always be mitigated by insurances

Finally, I see this a a new step in the evolvement of the financial sector. First, Kenya had foreign banks, then Nationally owned banks came in and they limited the licencing. To cater for the unmet market and especially for SMEs then, they formed Finance houses ( the likes of I&M, ABC, etc).At one point, these were also granted banking licences and the have done a dime well for themselves. When the licencing was stopped, we saw the growth of MFIs... and now we see Micro lending platforms... In essence, banking is changing and it is for the better.

I like the innovation, it has its risks but it is surviving because it has more advantages than disadvantages. We just need to figure out how to mitigate the risks..


I agree. Mobile loans are here to stay but need to be regulated. They pose significant systemic risk and this should be looked at and mitigated
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
jmbada
#114 Posted : Wednesday, January 23, 2019 11:59:12 AM
Rank: Member


Joined: 1/1/2011
Posts: 339
tom_boy wrote:
We need this mobile lending to be regulated. China realised this fact in 2017. Are we bigger than China? Are we special in a way to make us not feel the effects of such reckless lending?

I agree. But this is not reckless lending. It is smart lending from a purely business perspective. Not condoning it, but who would refuse to lend at 90% per annum, with a portfolio of, say KES10Mill comprising multiple smaller loans of around KES 1k. Even with a 50% default rate, you are still in the money. So the lending is not reckless, but obviously far from ethical.
tom_boy
#115 Posted : Wednesday, January 23, 2019 12:52:35 PM
Rank: Member


Joined: 2/20/2007
Posts: 621
jmbada wrote:
tom_boy wrote:
We need this mobile lending to be regulated. China realised this fact in 2017. Are we bigger than China? Are we special in a way to make us not feel the effects of such reckless lending?

I agree. But this is not reckless lending. It is smart lending from a purely business perspective. Not condoning it, but who would refuse to lend at 90% per annum, with a portfolio of, say KES10Mill comprising multiple smaller loans of around KES 1k. Even with a 50% default rate, you are still in the money. So the lending is not reckless, but obviously far from ethical.



Its not an ethical issue for me. Its reckless especially if banks are the ones doing the lending. We have seen that in China, online lenders have folded due to massive defaults. I dont mind a fintech putting its money on the line via mobile lending. I am opposed to banks putting depositors money on the line. That is my money and your money. Who is checking to see that they dont put too much money in this asset segment. If a bank has say 50% of loans on mobile, what will happen to that bank in case of massive default. What will be the domino effect on the financial system.

We now have banks in trouble like hfck going online and mobile. Next they will be giving mobile loans. Hungry execs looking for outsize bonus will dish out more money on mobile coz its easy money. When the defaults come, not if but when, it will be ugly.
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
rwitre
#116 Posted : Wednesday, January 23, 2019 1:20:29 PM
Rank: Member


Joined: 3/8/2018
Posts: 229
Location: Nairobi
tom_boy wrote:
jmbada wrote:
tom_boy wrote:
We need this mobile lending to be regulated. China realised this fact in 2017. Are we bigger than China? Are we special in a way to make us not feel the effects of such reckless lending?

I agree. But this is not reckless lending. It is smart lending from a purely business perspective. Not condoning it, but who would refuse to lend at 90% per annum, with a portfolio of, say KES10Mill comprising multiple smaller loans of around KES 1k. Even with a 50% default rate, you are still in the money. So the lending is not reckless, but obviously far from ethical.



Its not an ethical issue for me. Its reckless especially if banks are the ones doing the lending. We have seen that in China, online lenders have folded due to massive defaults. I dont mind a fintech putting its money on the line via mobile lending. I am opposed to banks putting depositors money on the line. That is my money and your money. Who is checking to see that they dont put too much money in this asset segment. If a bank has say 50% of loans on mobile, what will happen to that bank in case of massive default. What will be the domino effect on the financial system.

We now have banks in trouble like hfck going online and mobile. Next they will be giving mobile loans. Hungry execs looking for outsize bonus will dish out more money on mobile coz its easy money. When the defaults come, not if but when, it will be ugly.



it's not reckless. These are small amounts per person. Spreading out to minimise risk while increasing profitability.

Take KSh. 1000000 for instance.
Lending 1000 to 1000 people is far less risky than giving the entire 1000000 to 1 person.

Even Okoa Jahazi is technically a loan. People pay it back religiously without feeling the pinch. Fuliza is following a similar path.

Say you have an overdraft of 5k using Fuliza. Will you close down your line (which is linked to your social and business life, chamas, saccos and even the church register) and buy another one just to avoid the burden, and start all over again with a low loan limit? Meanwhile you find another lender and vow never to use MPESA again?

Safaricom is making leaps because of offering convenient solutions to problems Wanjiku has. Banks have simply not been innovative in developing means of assessing an individual's credit profile, and relying on the traditional modes of lending.
Angelica _ann
#117 Posted : Wednesday, January 23, 2019 1:57:07 PM
Rank: Elder


Joined: 12/7/2012
Posts: 9,999
By the way why are we referring to mobile loans to be ponzi, i missed that memosmile
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
Wakanyugi
#118 Posted : Wednesday, January 23, 2019 5:21:34 PM
Rank: Veteran


Joined: 7/3/2007
Posts: 1,512
Angelica _ann wrote:
By the way why are we referring to mobile loans to be ponzi, i missed that memosmile


They are not ponzi. Simply good business- high risk but low impact. And unless we are willing to include the, equally pricey, MFI loans, we have no business demonizing mobile loans.
"The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
MaichBlack
#119 Posted : Wednesday, January 23, 2019 5:39:34 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,220
Angelica _ann wrote:
By the way why are we referring to mobile loans to be ponzi, i missed that memosmile

It is the unfortunate act of one liberally using words that they don't know the meaning! And that is where one starts losing the plot!!!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
jmbada
#120 Posted : Wednesday, January 23, 2019 6:16:15 PM
Rank: Member


Joined: 1/1/2011
Posts: 339
tom_boy wrote:
jmbada wrote:
tom_boy wrote:
We need this mobile lending to be regulated. China realised this fact in 2017. Are we bigger than China? Are we special in a way to make us not feel the effects of such reckless lending?

I agree. But this is not reckless lending. It is smart lending from a purely business perspective. Not condoning it, but who would refuse to lend at 90% per annum, with a portfolio of, say KES10Mill comprising multiple smaller loans of around KES 1k. Even with a 50% default rate, you are still in the money. So the lending is not reckless, but obviously far from ethical.



Its not an ethical issue for me. Its reckless especially if banks are the ones doing the lending. We have seen that in China, online lenders have folded due to massive defaults. I dont mind a fintech putting its money on the line via mobile lending. I am opposed to banks putting depositors money on the line. That is my money and your money. Who is checking to see that they dont put too much money in this asset segment. If a bank has say 50% of loans on mobile, what will happen to that bank in case of massive default. What will be the domino effect on the financial system.

We now have banks in trouble like hfck going online and mobile. Next they will be giving mobile loans. Hungry execs looking for outsize bonus will dish out more money on mobile coz its easy money. When the defaults come, not if but when, it will be ugly.

The CBK is the regulator for Banks in Kenya. Banks' lending portfolios form part of regular reporting requirements. I believe that Banks are only lending to their OWN existing clients as they need to meet KYC requirements. If hungry execs wanted to dish out loans for "easy" money, they would simply lend larger amounts without checking credit status or investing in digitisation. The real isssue here is not that Banks are finding new ways to advance loans while distributing risk, it is whether or not the lending is being used to advance loans that are designed to attract penalties, effectively circumventing the interest rates cap. I.e. the one day loan is at 13% per annum but penalties if you don't pay by midnight are another 13%. This is not an actual default as you pay the next day. However, the penalty may yield another 13% annualized charge.
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