1. Strict regulator’s policy regarding responsible lending
According to the World Bank, South Africa is one of the most indebted countries, so the local regulator is pursuing a rigid policy to control credit organizations.
Such a restrictive policy narrows the circle of people who have access to credit and motivates organizations to take a responsible approach when doing an assessment of a borrower's ability to repay a loan.
Moreover, If a loan is disbursed to a client which they cannot afford, the lender runs the risk of the loan being written off, or a fine being imposed on the lender by the regulator.
2. Comprehensive verification process
The level of financial fraud in the online lending market is quite low and is mostly due to the way the funds are disbursed. At Lime Loans South Africa, borrowers only receive loan proceeds in their salary bank account and these transactions further go through a multi-stage verification process.
The verification process itself is very thorough. When registering a personal account with Lime Loans South Africa, new clients must attach a bank statement for the last three months. AI algorithms and loan processing specialists ensure that a person regularly receives a salary not less than the minimum stated in the Lime Loans South Africa Credit Policy. The next step is a credit bureau assessment of the financial behavior of the borrower. Loans are not disbursed to customers who have arrears with other credit institutions, have judgements against their name, are under debt review, or applied for debt review with a debt counselor.
The credit report itself further contains notes if any previous suspicious activity was recorded. Lime Loans South Africa’s internal processes and operating procedures combined with the credit bureau information have reduced identity fraud close to zero. At Lime Loans South Africa, for the past six months, only 0.0008% of the total number of applications contained fraudulent data.
3. Developing microfinance market
Limited fraud in South Africa is primarily due to the financial services market in this country being quite young compared to European countries. However, the South African economy is developing rapidly, so credit institutions should be thoroughly prepared for the fight against syndicate fraud.
Foreign companies must adapt their scoring system to local market conditions. For Lime Loans South Africa, the use of previous international experience and the emergence of automated anti-fraud solutions, will further reduce the level of disbursed fraudulent applications.