Credit management meets innovation and ethics in Nigeria, with Moses Nmor

Developing markets have a reputation for being unavoidably high-risk for lenders. And sure, developing markets are associated with less stable employment which can undermine repayments but in reality, how much of the observed historical losses could be avoided by embracing local knowledge and implementing better collections?

It turns out, quite a lot of it. And by better collections, mind you, I don't mean tougher collections. In fact, its almost the opposite. BFREE is a Nigerian fintech founded on a deep dissatisfaction with the available credit collection options which seemed to thrive on humiliating customers - so they set out to change the narrative by offering borrowers a clear path towards long-term financial stability through a combination of our self-servicing, messaging automation, contact centre, and machine learning solutions.

I'm speaking to Moses Nmor, co-founder and Chief Product Officer of BFREE, to hear the full story.

You can reach the team and learn more about their work at https://bfree.io/ or on LinkedIn at https://www.linkedin.com/company/bfree-global/ (you'll also find the team there, and as Moses says, they're very friendly)

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Regards, Brendan

The full written transcript, with timestamps, is below:

Moses Nmor 0:00

Initially, there were two ways. First one was pure call centre model, so having a list of customers I want to recover from, and just call them and remind them for payments. That's one model. The second model is naming and shaming, where they use, you know, your pictures, post you to groups, share your data with your contacts.

And both of them were working with us, mostly because they needed the call centre to do that. And then in some other cases, they were done internally by the lenders, and so doing the name shaming themselves.

Brendan Le Grange 0:35

When I was building collections processes for a bank in Africa, my team on the ground used to laugh as they spoke to me about some of the tactics employed by the less scrupulous and less regulated industry peers. One I remember was the big yellow car emblazoned with debt collectors.com, or something equally conspicuous, which the collector would park in front of the house of the delinquent borrower, then they'd just sit there, maybe reading the newspaper for a few hours, allowing the social embarrassment to really seep in, before they got out, knocked on the door and attempted to make a payment plan.

And we had to aim the stones, we were throwing their way very carefully, because we knew that the military brass would sometimes use morning parade to call out their soldiers who were behind on our loans.

It was not ideal. But I'm embarrassed to say now that I just kind of ignored it. Today's guest did not be freeze founders had become deeply unsatisfied with the available credit collections options, which they thought mostly thrived on humiliating customers.

So they decided to build a more customer centric approach, one that leverages ethics and technology to lead customers sustainably out of debt, and onto a path of financial freedom.

Welcome to How to Lend Money to Strangers with Brendan le Grange.

Moses Nmor, you are the co-founder and Head of Product at BFREE where credit management meets innovation and ethics. And so we're going to talk a lot about debt collections and how to do that in a better way in the modern economy.

But before we get into BFREE and what you're doing there, you've got a very broad experience, from telecoms, to hotels, and now more recently into financial services. So let's start a few steps back, maybe talk to me a little bit about your career, and your life and sort of what shaped you into the founder you became.

Moses Nmor 2:46

Thank you for having me, Brendan.

So yeah, I think that being brought into an average Nigerian family, my dad used to work at the airport as a civil servant. As a family, we had to move across cities a lot. I was born in the northern part of Nigeria, so my parents actually to speak fluent Hausa. We left Kano in 1992, just because of the religious riot that broke out. Nobody could stay in that area.

So we left there in 1992, and move to the village. So in Delta,

But yeah, that's, you know, it's one of those things, basically how it was easy for me to move from one place to the other. My nicknames growing up was 'The Roach', 'The Cockroach', because I got used to thing quite quickly. Adaptation was not a problem.

And this is something that translated into my work life. My first experience ever was an accounting clerk at an accounting firm in Lagos, Crowe Dafinone. Then from that, I went into a call centres. I worked with MTN, and from MTN I moved to Hotels.ng

There I started as a call centre agent, but because I was also technically sound, I actually had to be the guy who sets up the call centre there with the hardware and servers and systems to make these calls. So quite quickly, in five months, I was already head of the call centre at Hotels.ng Two years later, I was then made to begin to manage sales. As the roach that I am, I think I did a really good job. After spending three years at Hotels.ng I had to now take a leap of faith into financial technology.

So at this time, OPay was just beginning to come into the country. It was the first time they had set up office and I was employee number eight. And I was called to build the business development team. So I joined business and quite quickly, we understood that the product we wanted to sell at the time was not ready for the market, because it was not up to par what they had already - we were trying to sell a gateway.

So we had to like do a rollover and say okay, let's just do something that is easy and we started the agency banking.

Brendan Le Grange 4:58

What was the spark that got you from the environment you were in, where you were doing a lot of this founder type problem solving to actually saying, I want to start this business that addresses the problem of debt collection, rather than say something more inherently sales driven?

Moses Nmor 5:15

So while I was doing all that I was doing, right, including my move from Opay to Fair Money and then to BFREE it was always... yes, it was sales, but I was also doing a lot of product research. So this means that I learned how to interact with customers who were using my product.

This is also because like I told you earlier, OPay had no product market fit. So the only way to get product market fit was to use the sales team to do a lot of research: field research, customer research, user research to get what was in the market that they didn't like and that they wanted to change. It had given me a lot of perspective to know, how do I know what the customer really wants? How do I put myself in a customer's shoe.

So you know, the platforms like OPay would hand an agent or a merchant a POS - it's a device where you use your card for payments - they hand them that device, but then these guys are going to usually be in areas where there are no banks, you know some of them in the creeks, some of them in villages, some of them in these kind of areas where my family had to run away from, and there's something called debit error, the card is debited but the transactions is not approved, but the money is out of the accounts. In Nigeria, you could wait up to three months. In fact, I have had to one of my travel experiences, I've had to wait six months to get my money back.

Now imagine being that agent in that city where there is a Moses who went to withdraw ₦20,000, my last one in my account, and then I was debited and one wasn't paid out, or imagine it was a chieftain in that area - I would not have peace, right!

So, in as much as I was a salesman who was always supposed to be pushy at all times, what I needed to also understand what was the problem that I was solving for them, right and try to solve that for them.

Now, wearing this new hat for me as a salesperson, I'd already prepared me for what it was going to look like when I moved to a company like Fair Money. And if you look at all three co founders, we actually were all at Fair Money at the time. And we moved out just to go to this. When I got into Fair Money, and then the COVID era just hits, we basically began to see one new thing, which was that the guys who were doing collections for us at the time, were still doing collections, like it was 2018 - where the customer just needed a call for them to remember to go to make the payments.

They did not need you to help them structure payments, you know, create a payment plan; they did not need you to help them with any educational of any sorts. They were not in any mess whatsoever. The economy was fine and everything looks good.

When COVID hits, it then meant that people were borrowing more, but the NPL rates were growing as well, because people were not paying back.

The stories that we used to have before which is 'oh, I forgot' or 'sorry, I'll pay tomorrow' or something like that. What's now different is it's now a case of 'I don't have money, I've not eaten, I've not been able to feed my kids the money, the money I have is not enough so I will pay in x, y, z time. This gave us a new idea.

Which was how about we show these people that, yes, you have failed the first time, why not just split this thing into into small packages that can allow you not struggle too much, but be able to actually get yourself out of this debt as quickly as possible?

And that's what's bettered, you know, the reading. When you look at, you know, when I was doing sales or user research or product research at the time, it already started building me towards becoming the founder that I am today.

Brendan Le Grange 9:02

Maybe if you could set the scene generally across the market, what would have the context been, what would have been normal collections experience have been for consumers that were owing money in unpaid debt?

Moses Nmor 9:14

Initially, there were two ways. The first one was pure call centre model, or BPO model, having a list of customers I want to recover from, and I just call one of the BPOs. That's one model. The second model is name and shame, which is an idea or a method or whatever where they use your pictures, post you to groups, share your data with your contacts - because during the known acquisition period, you have already shared consented to 'you can take my log, you can take messages' so they have access to all of that data. So they begin to reach out to your contact. So this connection basically is the second model.

And both of them were, you know, working tenuously because they needed the call centre. And then in some other cases were done internally by the lenders. And so doing the name shaming themselves.

Brendan Le Grange 10:06

Early in my career, and this would be 15 or 17 years ago, I worked for a bank in Kenya, designing collection strategies, and the employees and the bank would sort of be laughing at what else happened in the market.

So we wouldn't be doing directly but the sort of stories that we would hear then were I guess, pre smartphone name and shame tactics. Where a very obvious yellow car would park in front of a house for a few hours, and then come and knock on the door to ask for money, where there'd be a list up on the door at church or the staff meeting on a Friday, would read out names of people owed money on their staff loans.

And it was quite a common practice.

And, you know, in other markets, some of the customer protections in terms of data, privacy helped that but I think there was still that mindset of not, it's fair game. But certainly the customer in collections is a is a lesser customer. And it's interesting to see how quickly you were able to move that mindset. So let's talk a bit about how you reimagine that process to be more in favour of the consumer. What does your collections process look like now?

Moses Nmor 11:06

The good thing about how we started was that we had real life data or had real life access to actual customers due to this entire experiment. They were customers were our former employer and we created a model to see how collections would look like if we're more humane, and we're ready to help.

So at the time, it was actually like we were doing it in the field.

It was face to face physically. We had people in the field who would meet these customers and sit them down and say, 'oh, do you know that this money you are owed is already X number of days, let's say 120 days, and we could help you get this thing out but you have to find a way to structure out these things'.

And let me give you a typical example. Some guy takes 100k loan, ₦100,000, right, he was supposed to pay in six instalments, he didn't pay the first instalment, 30 days later he didn't pay the second, 30 days later he didn't pay the third, you know, till the sixth one. So over 180 days, he didn't pay any one of the instalments.

Now, when the call centre from this lenders will reach out to the customer, they will say you are doing ₦100,000 there plus the you know, the interested, so like ₦120,000 which we need you to pay now.

There is no consideration for whether that guy had that money now, or you would ever have it in the next six months. Basically, instead of actually like helping that guy structure it so that after one year you will have recovered all of that money or even, you know, see the path towards recovery. Because sometimes when you structure these things for these customers, and say pay in 10 months, in six months, they pay usually, when they see that you constantly follow through with them, they basically now say 'let me just double up on this speed, and then pay, you know, to the end of it'!

We tested it in the field. And the we ran it for four weeks. And we were doing the same in the field was going 40% better than the team that we outsourced. We had already thought I was going to work. But this was now double validation that this thing was going to express me.

Brendan Le Grange 13:13

Yeah, and let's maybe talk a bit more about the BEFREE business. So when you went out on your own and you started your own business, what was the reality of that like and what was the founding journey in the early days of making BFREE?

Moses Nmor 13:25

I can tell you for free that it's not easy!

I think that when you when you kind of like see other founders that you are the employee, you basically do not understand why your salaries blades, why in as would say the empty as no sign the check, even though easily is in his office is probably just thinking about his life day by side this check. There might not be another check next month. But yeah, it was a reality in because we also started fully bootstrapped, didn't close the route to like much the next year. So we had to like run from August up until March, fully bootstraped.

So because I was very technical it meant that I laid the cables at the office, I laid the network cables or the office, I set up all the computers at the office. You know, luckily, there was a colleague of mine, we used to work together, he used to work in my team, he was actually sales agents in my team, I just hired him and said, come and join me and you can help with, you know, maintenance, basically. But generally, it meant that was this, as the Roach, had to like lay cables at the office, set up the network, get the ISP ready, get the service or the office, set them up, basically and fix everything and make sure that calls were going is okay.

And even for the software aswell, right, it meant that the CRM needed to be built after CRM was built out of a spreadsheet by my co-founder who is like a really good you know, Excel guy, truly and, you know, as a founder, basically, what I can say is that, first off, it's not easy. But yeah, I think that if I was given the opportunity to do this again, I like the adrenalin, so I will do it again.

Brendan Le Grange 15:05

And I think back to my day fraud and collections, often the manager there is sort of an ex policeman or somebody who's believes in that sort of firmer approach with their customer, maybe they might be a bit reluctant to try somebody new. How has it been? Have you experienced that as BFREE growing? Are you seeing more people accepting that your your approach can work and does work.

Moses Nmor 15:25

So the advent of push and pull on social media helps brands to see the need for customer retention, and customer attention, basically. So it's already had created a perspective or created a platform for us to discuss with new partners. In the first five, six months of our setup, we already had three of the biggest lenders in Nigeria. Today, we have right about all of the digital lenders in the interior we have, and some of the biggest commercial banks in Nigeria.

So yes, that will give you an idea of, you know, what's reception is like for us.

When you do speak with the commercial banks, they tell them what your practice is like, they will say, Oh, dammit, we have been looking for somebody who does elections that way. You bypass sales funnel, I didn't expect I was going to be that we're planning with the commercial banks, some of them are even shorter than three months. And to close a commercial banking deal. The first one we actually did was roundabout seven months, which was long, what immediately after that was done, the rest of them were a lot shorter, because we didn't need to tell them a lot of stories, when they hear that you've already closed with one commercial bank, they just want to call their bank and friend and say, Well, this guy said they work with you what is their work life. And even now that we are going into that buying and stuff, it's mixed the conversation in shorts, and I know for that to have with but yeah, receptionist pretty good. This is because nobody was a bad brand. Nobody wants you know, those days, they used to say bad publicity is good publicity, right? These days, nobody was part of this, whether it is big, bad or small, bad, nobody wants it. So and what we do today, it's best, you know, for with the partners and the customers themselves.

Brendan Le Grange 17:09

Yeah, because you talked earlier about the debit issue and how, if you'd got it wrong for a chief, then you're going to have trouble. But today, you don't know who's got that influence online. But you leveraging AI quite a lot to automate the process as well. So good old fashioned efficiency savings for the cold hearted accountants among us as well.

Moses Nmor 17:29

80% to 90% of the collection activities don't without anybody having to sit above the laptop and try to format documents or try to upload to YouTube to send SMS any the structures and systems of web flows or workflows within systems like temporale, which is what we use today to structure communication across a particular period of a customer do A B testing for the set of customers as well for what kind of content was best for them. In fact, our content engine is as big as you can get, right?

So the entire process of how the data gets from the CRM to an agent's phone call is not manually done in any way. Because immediately the data gets in the call centre knows which people to actually understand, you basically have used a system that has lesser headcount, not just on the agent side, but also on the operational side as well. The faults in that entire process will be as minimal as possible, because like there is no human, you know, attention to it's really it's, yeah, if they are like issues, the issues that you can actually like know where the issues appeared from, but like mostly, everything is like purely automated content generation, the content approval process, the data upload process, the messaging is purely workflow driven. And because we are also able to like tell, which we should be called, which we shouldn't be called which we should get an SMS, we should we shouldn't shouldn't get an SMS, what's kind of costly, we want to go for this kind of guy, which kind of cost we want to push for this kind of guy, you're ready to cost control within that same and our, you know, workflow process or AI, not just best practice for the process itself, but best practices for collections and also best practices for cost.

Brendan Le Grange 19:15

Yeah, so Moses, obviously, as you've said, you're not just doing the the collections anymore, you're also expanding into more related areas, one of which you mentioned is the debt purchase. What is your approach to debt purchasing?

Moses Nmor 19:27

So today, we already launched with a couple of clients of ours we already currently do collections for so right now we actually now paying the debts to older via we already launched them in Nigeria and in Kenya as well. That's the purchase process.

We now acquire the debts they become ours and they will be collects those debts to be able to recoup what they were found that we are currently purchasing. That's as new young as 180 days on websites days. So or as much as 1000 days 1000 dates, right. So but then this is also on the premise that we are sure that we'll be able to get our money back. So we basically did a gamble to go on to the purchase and collect afterwards. But it's new in Africa, right. So it means that we, we have to own our own beauty process around it, educate our partners, we are typically right now the first doing digital debt purchase in Nigeria, and also one of the few doing it in Kenya, Kenya is a more advanced market, one of the few units in Kenya. So yeah, it's the first batch we just acquired recently. And we intend to expand on that as quickly as we can, in the next couple of months.

Brendan Le Grange 20:45

If you know the market, you can make all of this work. And there may be a lot of the risk that exists there, or the perceived risk is from bad systems dropped into place from abroad, maybe heavily dependent on sending out letters in markets where addresses aren't really great, maybe it just does require they're putting faith in local teams that understand the market, you can actually make it work.

I think it's eye opening to see it. Refreshing to see that just because it's three years written off a proper approach means you can actually get that money back or a significant amount of it.

Moses Nmor 21:16

And typically plays out to one of the things we want to achieve, which is that long run if this lenders themselves see that they can actually sell these loans, it means that the interest rates will go down a little bit, if we get to the point where we are able to, like it happens in advance markets, buy even before the loans are this loss, so right before they had this loss, then the interest rates would go a lot lower because the lender themselves know how much they would get if the person doesn't pay.

And it only starts with the first step. For us. This is the first step, we intend to as much as possible be the entire circle, basically, of lending and borrowing and collections and all of the other areas that we intend to include in the tokenization, which will probably speak about at some point.

Brendan Le Grange 22:07

But you mentioned the the tokenization, talk to you about what you're doing in tokenization. And what do you think it could mean for the market?

Moses Nmor 22:13

Let me start with what's so what's tokenization within the lending space would mean would be that somebody who, you know, just has one in the bank and wants to make it safe and secure and still have interest on it and not have to worry so much could go and actually buy a token that would represent maybe 50, because loans in one market did not need to grow. And that asset is stored in the in a stable coin. And that stable coin reflects how much that person has invested.

And at the end of the day, the person gets their money back within the interest and if they choose to reinvest the reinvest, so there's no loss really, because for them, it is safe investment, the only thing that will probably affect it is the value of the currency. So it's not the coin itself, so is the value of the currency. So if dollar inflation happens or our reputation is but what this also means for the market is that lenders themselves can now lend more, they can now have one liquid, more assets to do whatever they need, they can now expand because they are sure that there is wanting to expand and then there is money that they basically would get even before it becomes a problem.

It creates that kind of environment. Well, not just small lenders, but also for really big lenders who do not mind keeping you from zero days is equally or one day defaults basically. And our job dad's to ensure that we've used the technology to ensure that collection is done properly, we are able to give you that interest with honesty, you were able to talk elections will come apart from that also, but it tried whatever we

Brendan Le Grange 23:57

if people are listening, and they liked the idea of this token, or they just liked the idea of seeing kind of AI driven humane collections happening in West Africa and East Africa, markets, maybe they are not so familiar with, where can they go to learn more about be free, and to keep up to date with your story as you grow.

Moses Nmor 24:15

So I think one of the best platforms will be our websites, but also if they want to, like have sessions with us from time to time, like actually, like reach out to any one of the co founders. Julian usually is like the guy who understands finance a lot and can actually like folk who know most of these things even you look better than I well. Yeah, our website is BFREE.io.

Brendan Le Grange 24:43

That's how I got ahold of you. Is it called reach out on LinkedIn. So I've been through the process. They were very friendly to me so you can take their word for it. Moses, thank you so much for your time today. It is a very exciting project. I'm going to definitely keep my

And thank you all for listening. Please do look for and follow the show on your favourite podcast platform, and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.

This show is written and recorded by myself Brendan Le Grange in Brighton England and edited by Fina Charlson of FC productions. Show music is by Iam Wake and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show (or just www.HTMLTS.show) and I'll see you again next Thursday.