Shield Finance Reinvents Salary Advance Loans In Kenya With Their Android Mobile App
Shield Finance is an innovative finance technology (fintech) business that has been on my radar for the past year or so? This is partly due to the fact that one of their investors is someone I know well. However, its their Founder Kenny Kinako who I met recently for a chat that I know lots better.
Kenny and I used to work for Naspers through their MIH subsidiary a few years when I was running Dealfish East Africa (now known as OLX Kenya) and he was working for Mocality, the now defunct but truly innovative Internet-based mobile business directory. Kenny left Mocality shortly after I joined Naspers to work for Ringier where he was involved in running Rupu, the daily deals website and Pigia Me, the online classifieds business.
Kenny and I met at Pete’s Coffee which is located at Bishop Magua Building where the Shield Finance offices are also located at the mLab. Kenny shared with me the long and arduous journey he has taken to getting Shield Finance to where it is today over the last couple of years, culminating in their latest breakthrough – the Shield Finance salary advance loans Android mobile app.
The interesting thing to note is that Shield Finance started operations using more or less a traditional loan making approach without a mobile app or website that offered such features. They recently pivoted their entire businesses model to focus on using a mobile app to issue mobile money loans, similar to the likes of Tala (formerly known as Mkopo Rahisi) or Branch who also offer mobile money loans via mobile apps.
However, the big difference between Shield Finance and others mobile app loans businesses like Tala or Branch is that they focus on employed customers which reduces the risk of loan defaults. They also offer loans from as little as Kes. 500.00 and all the way to Kes. 70,000.00. However, for one to apply for a Shield Finance salary advance loan they need to install their Android mobile app from Google Play.
Secondly, one can only apply for a loan via the mobile if their employer has been vetted and added to those on the Shield Finance database. As it turns out, all that is required for an employer to become a Shield Finance partner is for them to register for the service via their Finance department. In addition, they have a referral program built into the mobile app so that successful loan applicants can refer colleagues to the service for lower loan repayment rates.
The process of applying for a Shield Finance salary advance loan via the Android mobile app is really easy and the whole process from loan application to disbursement via mobile money like Safaricom’s M-Pesa can take as little as 5 minutes. In addition, so as to minimise risk, Shield Finance uses credit reference checks in near real-time to vet loan applicants before they approve their loan applications.
Lastly, because Shield Finance issues its salary advance loans on a daily rate versus a monthly rate, one pays loans back at a low daily rate of 0.33% which is impressive! As of this writing, Shield Finance is only offering loans in Nairobi which streamlines the process of securing loan repayments in a timely manner although they plan to enter more cities and towns in Kenya soon. My sense is that looking at what Shield Finance and others are doing in the fintech space, they have the potential to disrupt existing financial services providers at scale if they can secure substantial long-term funding.