Opera brought its business to Kenya a few months ago and in the process of cementing its stance in the local scene, the multinational company, whose Managing Director Mr. Eddie Ndichu has vast experience in fintech services, launched a mobile loan app about one month ago.
We spotted OKash beta (it is stable at the moment) in Google Play and decided to test it before Opera sent the word out of its official availability. During the initial set up, we realized app, which has since been downloaded more than 20,000 times requested a bit more information than we are accustomed to, which is why we sought an explanation from Mr. Ndichu who was glad enough to delve into the product and what it purposes to achieve in the long run.
Why does OKash request for too much information?
“OKash has a robust system that seeks to identify who the customer is before a loan is disbursed to their phone. This goes in line with the fact that strangers never give you a loan because they obviously don’t know who you are. In other words, we need to know who’s borrowing cash from us. Also, the better we know a customer, the better we are able to analyze a better limit and price for them,” says Mr. Ndichu (paraphrased).
Generally speaking, OKash, which prompts users to fill in key information such as education level, monthly income (to ascertain disposable income), outstanding loans, marital status, employment and residential details, and referee details, took this bold step to determine the probability of default/repayment and the intention of the customer. The app is also packed with additional intricacies that links payment info such as a monthly salary to the ability of furnishing loans on a 30-day basis. If you are on a contract basis or a trader, the app may reduce your repayment period to a fortnight, and so forth. Collectively, this information is curated to offer loans that customers can be able to repay in a timely manner.
Mr. Ndichu mentioned the app gets weekly updates based on customer feedback and continual learning curves. For instance, when a user inputs a referee’s number, the app checks if the number has, say, downloaded OKash, borrowed and repaid a loan successfully. As a result, the primary customer will receive a better loan limit.
“OKash is not built on the need to give customers money; it is about making sure you borrow funds that you need and ability to repay,” adds Mr. Ndichu.
How about those loan limits?
“Every OKash customer’s lowest limit is KES 1,500,” says Mr. Ndichu.
This was a reply to why users cannot see an option to revise their limit downward. Opera says its market analysis did not see the potential in a threshold below the stated amount.
Similar to other loan apps, that limit can appreciate or drop significantly depending on how fast repayments are made.
That said, what is OKash’s strategy is a market that continues to see new players in the mobile loan apps space?
Admittedly, mobile loan apps have played a key role in bridging the bureaucracy gap that saw users fill a lot of forms for them to get access to loans from banks. It is a strategy that has worked thanks to efforts that stem from mobile money services, which is why we needed to understand the motivation behind OKash’s decision in this space (save for the obvious fact that is it lucrative).
“For over a decade, Opera has been offering affordable and reliable access to the Internet. In fact, it is far cheaper to browse on Opera Mini than other mobile browsers. Hence, Opera built a compression algorithm that saves data and by extension, money,” argues Mr. Ndichu.
The same premise was used to develop the financial service under review, where OKash leverages the company’s goals by offering services on the cheap. For instance, the app weighs a measly 3 MB and occupies around 7 MB when installed. Admittedly, this is small for an app of its feature-set and is pleasantly dwarfed by its competitors as far as size is concerned.
On the whole, that is what OKash really is: offer critical financial services to a demographic that is data-sensitive, as well as being light on resources. It is graduating customers from STK and USSD with access, price, term and a better experience, to say the least.
He adds, “We are using these features to respond to what the customer needs and mostly, that need is based on immediacy.”
How about users who are not M-PESA customers?
It has become a norm for mobile financial apps to target Safaricom’s M-PESA users with their products. It makes sense owing to M-PESA’s dominant market share, which translates to more transactions and increased revenues. However, users who use other platforms feel left out, and here is what Mr. Ndichu had to say:
“Mobile money has helped us accelerate financial services. It is unfortunate the dynamics of the market forced us to go where numbers are, and that is Safaricom and M-PESA. However, we are not going to lock out users, which is why we will consider them in the near future.”
OKash, which has since disbursed more than $1 million in loans, will, in the future, allow customers to deposit their loans on multiple carrier-based mobile services and banks. At the same time, the firm will enable various channels for loan repayment. These updates will be out in the next three to six months.
What about future deployment to other African countries?
Mr. Ndichu mentioned that Opera has a robust digital strategy for Africa for the next 3 years. Dubbed Africa First Strategy, the plan tests new products in the African market, which is what the European corporation did with Opera News.
At the moment, the company is trying to figure out how it can replicate the strategy using financial-based products. All the same, the Opera’s vision is to spread the product across the continent.
At the moment, Opera’s fintech product in Africa is OPay that we discussed here and here. Briefly, the product features an e-wallet and merchant payments. OKash is OPay’s lending/loan product.
When it launches as an app, customers will get access to OKash inside OPay or use the mobile loan product as a standalone app.
“We launched OKash first so we could learn customer patterns as early as possible,” highlights Eddie Ndichu.
Lastly, we’ll dive into OPay’s offerings when it goes live.
