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success stories / Using CRM to Reduce the Number of Non-performing Loans

Central Bank of Africa is using CRM to extend financial inclusion

Following the launch of the mobile financial service - M-Shwari, CBA customer acquisition has grown by 440%. Today, CBA claims 22,000,000 customers, compared to just 50,000 in 2010, before M-Shwari was launched.

  • Central Bank of Africa crm case study


As the Financial Services Industry around the world evolves in the digital era, the evidence is quickly mounting that mobile financial services have the power to increase financial inclusion, especially in emerging markets. Not only do mobile financial services improve access to financial services for individuals, they also reduce poverty and improve financial inclusion.

The Commercial Bank of Africa (CBA), with headquarters in Nairobi, Kenya recognized the potential inherent in boosting financial inclusion through mobile saving and lending product and decided to develop and launch fully digital banking services as part of a strategic initiative to serve a large and entirely new demographic – the underserved Mobile Money users with limited access to financial services. CBA has partnered with a telecom operator to launch a mobile lending and saving solution that allows customers to save and borrow cash right on their mobile phones. The entire service is fully digital, requires no signing of documents and offers products for micro-savings and micro-lending.

Scaling from 50,000 to 22,000,000 customers

The mobile financial service - M-Shwari – is an impressive financial inclusion success story. The new service drove an impressive growth - following the launch of M-Shwari, CBA customer acquisition has grown by 440%. Today, CBA claims 22,000,000 customers, compared to just 50,000 in 2010, before M-Shwari was launched.

At the heart of this achievement lies the CRM system and VeriPark's CRM solution VeriTouch, supporting new customer growth and retention. An advanced solution was required to scale the service to the exponential growth in customers. Essentially, the micro-lending concept works the same as with regular banks with some limitations. While traditional bank loans are often secured by collateral, microfinance lending tends to be unsecured. Therefore, the customers establish a new kind of relationship with the bank where the borrowers are expected to start repaying soon after getting their loans.

To manage the large volume of microloans, CBA began looking for ways to efficiently manage the collection of overdue and non-performing loans. The bank turned to VeriPark for CRM system expertise. "VeriPark's solution was highly customized to financial services, making it a great fit for our requirements," said Richie Sobayeni, Business Process Manager – Customer Experience at CBA.

  • CBA Banking CRM
  • CBA Banking CRM

Streamlined collection workflow ensures low levels of non-performing loans

At CBA, there is an average of 600,000 collection tickets raised every month. Thanks to the streamlined workflows in VeriTouch Collection Module on the Dynamics 365 platform, the bank now manages the end-to-end collection process to ensure the collection happens within the early stages of the payment cycle. It also helps to reduce the number of customers forwarded to recovery and write-off process. The bank sends proactive SMS and e-mails to customers to remind them that their loan due date is approaching. If the loan is not repaid on time, the customers receive a second and then a third reminder.

VeriPark's CRM solution brought several other benefits to CBA, including an automated collection strategy based on the product or customer and effective activity and workflow management capability. Centralization of the entire debt collection process, simple access to data on collection tickets, and accurate reports on debt collection were other key benefits that reduced write-offs, provisioning and improved cash-flow.

As a result of VeriPark's CRM implementation and its Collection Management module, the bank has been able to keep the percentage of non-performing loans (NPLs) very low. After an initial spike, NPLs were reduced through improved credit scoring and collection processes. Customers' realization of the consequences of defaulting  -being reported to the Credit Reference Bureau which prevents them from applying for other loans – was also an important factor for the reduction.

Following the implementation, CBA also reduced the cost of collection significantly. The Collection module has eliminated the need for having separate systems and increased the collection team productivity as it is able to ensure the collection happens as per their agreement with the customer. Improvements in productivity and automation allowed the bank to reduce the payback period of the system from 5 years to just 2 years.

Accelerating financial inclusion with the right CRM implementation

However, CBA has even more ambitious plans for its mobile banking products. VeriPark's CRM Sales Management and 360 Degree Single View of the Customer modules helps CBA to identify potential customers who can be offered long-standing relationship with the bank. This means that the bank can effectively accelerate financial inclusion and bring more customers to its traditional banking business after giving them a start with its micro-lending product.

This also opens up opportunities for new revenue sources. Thanks to the 360-degree Single View of the Customer, the bank has access to detailed insights into the customer lifecycle, creating cross-sell opportunities to offer relevant products and services to the potential customers while increasing retention. By combining the customer-centric approach with the right CRM implementation, CBA aims to keep its significant role in the growth of micro-lending and the acceleration of financial inclusion in Kenya.

  • CBA Banking CRM Case study
  • CBA Banking CRM Case Study

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