5 challenges to offering digital loan services to your users

Digital loan products aren’t built in a day. Startups and scaleups looking to create their first digital loan product for their users must overcome these 5 challenges – and perhaps get inspired by Senegal-based digital wholesaler Maad.

Somewhere in West Africa right now a shopkeeper is placing an order on digital platform MAAD to restock beans, flour, cooking oil, or sweets from an FMCG brand – and they’re doing it without paying a penny upfront.

MAAD’s ambition is not only to be the best digital wholesaler connecting MSME merchants with FMCG brands, it’s also to improve the entire business model. By offering digital loan services – in the form of Stock Now, Pay Later – they’re beginning to provide their customers with necessary financial resources when, where, and with the frequency they need to thrive. MAAD’s journey to offering comprehensive digital services to their customers is well underway, and at Rubyx we’re proud to say we’re lending a hand with our LaaS (Lending-as-a-Service) technology.

But tech is just one of the challenges Dakar-based MAAD has faced along the way. For any other digital services startup or scaleup looking to pursue a similar path, it’s important to consider these five big challenges to offering digital loan services to your users. (And read to the end for more on our collaboration with MAAD!)


The financial sector is heavily regulated throughout the world, and knowing how to negotiate these regulations in the regions you want to serve is the first hurdle in creating a digital loan offer. The most basic rule is this: to start lending, you need a banking licence granted by a country or region’s central bank.

For digital loan products, usually an e-money licence won’t suffice. E-money licences often allow companies, like recently Wave Mobile Money in Senegal, to offer a limited selection of financial services – but usually not digital loans. And even obtaining this lesser licence requires a hefty minimum capital requirement.

For eager startups or scaleup digital service providers, the fastest and easiest way to get your first digital loan offer off the ground is to partner with an existing licensed lender, like a bank. Partnering with such an institution means you can leverage their strong capital foundations and regulatory compliance to meet minimum requirements.

Risk management

Once you’ve cleared regulatory financial hurdles by obtaining a banking licence or partnering with an institution that has one, you’ll need to consider risk management. Risk management means all the activities and methods put in place to prevent a borrower from defaulting, thereby ensuring a profitable business for the lender, while avoiding driving the borrower into further debt.

While some businesses may issue their first loans manually, offering advances or loans to a few select customers, once you decide it’s time to scale, and you have the data to do it, you’ll also need a good scoring algorithm to determine your users’ creditworthiness and ability to repay.

But that’s just the first step in risk management. In addition to a scoring and selection process, you’ll need to create the right loan products for the customers you have. These reality-based loan products should offer amounts and payment terms that are adapted to your customers’ financial “pulse” or the rhythm of their income flows. And the repayment modalities, including how frequently, and even where repayment must be made, must be fine tuned to maximise the repayment rate.


With your scoring algorithm, selection process, and product ideated, you’ll need to think about how to embed loan services on your site. More than just a plug-in, you’ll need to plot out the entire loan customer journey from beginning to end, and consider how to make every step a native, on-brand part of the process, one that works seamlessly beside your platform’s core business.

This involves not just the front-end aspects of what the user sees – the pop-ups or on-site banners or landing pages that communicate the offer, terms, reminders, notifications, and repayment modalities. It must also include the backend tech that will allow you to manage every aspect of the loan, including scoring, determining eligibility, selection, generation, distribution, management and collection.

For many startups or scaleups seeking to expand their offer into digital loans, the technical infrastructure necessary for loan distribution management can seem daunting. For this reason it can be good to seek out a technical partner specialised in Lending as a Service.

Scalability and flexibility

As mentioned above, it’s possible to launch your first loan product manually by offering loans to a handful of your very best customers. And, especially when your company is young and small, it can be tempting – and in a limited way, rewarding – to just dive in. But while you will learn a lot, it’s an approach that just doesn’t scale. Ambitious platforms need a system that can support their growth, one built on a strong tech setup, and powered by automation.

By automating your loan processes, from determining eligibility, to disbursing loans, to automated renewals, you’ll be able to create a system that can work much faster, and for less, than any system dependent on slow manual work. And automation can provide a much better loan experience for your users.

Education and client support

In order to maximise loan uptake and repayment, it’s essential to understand the level (or levels) of digital financial literacy among your user base. Many users of digital services are at different points on their own digital transformation – some may be fully proficient at one digital tool without experience in others; others may have used a variety of tools and platforms but still have no experience of taking out formal loans, whether digitally or traditionally served.

Understanding your users’ relative levels of digital financial literacy will help you shape your loan products, communications, and their user journey in ways that they can understand. It will help them make the best decisions and open a clear, manageable path to repayment.

Technology is important here too: your offers need to meet people where they are in terms of technology, whether that’s on a fast-moving smartphone, through SMS or USSD menus on traditional mobiles, or – to reach a user base with lower literacy rates – through voice messages. 


Resolving these 5 challenges is no easy task, but with the right research, approach, resource investment, as well as regulatory and technological support, your digital service platform can start offering digital loans that can help grow your business, theirs, and help increase financial inclusiveness throughout the developing world.

Stock Now, Pay Later: a peek at Maad’s approach to digital lending

Maad is a digital wholesaler based in Dakar connecting MSME shopkeepers with FMCG brands in Senegal. One of the challenges their customers face is as old as buying and selling: having enough available funds to purchase goods in order to stock the shelves. Maad started offering manual loans to some select customers, but as a scaleup with ambition, they’re now implementing a data-informed digital credit pilot programme using a  Stock Now, Pay Later approach.

At Rubyx we’ve partnered with Maad to provide Lending as a Service support, which starts with examining their order data to score customers in terms of creditworthiness and ability to repay. We provide Maad with tailored loan offers through API, and prospective loan customers are served digital loan offers natively through the Maad marketplace platform. When customers choose to accept loans, Rubyx works behind the scenes to track outstanding portfolio, monitor repayment and generate new offers. Data moves back and forth through our secure digital API, meaning data is daily, dynamic, and incremental, helping Maad improve efficiency and effectiveness far beyond any manual approach.

And for loan customer management, we’ve helped them build a SMS and voice message-based system for reaching, educating and supporting customers with lower literacy.

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