Startup Lagos

12-Feb-2025

Fresh News

LAPO’s Bank App Targets Younger Customers as It Aims to Grow Loan Book to ₦400 Billion 4 months ago

LAPO Microfinance Bank (MFB) is set to unveil a new banking app in the first quarter of 2025, targeting younger customers and diversifying its customer base beyond its traditional segment of petty traders. After successfully disbursing ₦237 billion in loans in 2024, LAPO aims to grow its loan book to over ₦400 billion this year by appealing to a broader demographic of Nigerians.

With a robust 35-year history as a microfinance institution, LAPO is known for offering small-ticket loans primarily to low-income earners. However, the bank seeks to reshape that perception and establish a more dynamic image in Nigeria's financial landscape.

The upcoming LAPO app will empower users by allowing them to take loans starting at ₦20,000, pay bills, perform daily transactions, track their expenses, and open fixed deposit accounts with interest rates competitive with fintech startups like PiggyVest and Cowrywise.

"We're creating a product that resonates with the evolving needs of our customers," said Amechi Koldsweat, head of digital banking. He emphasized that while LAPO's traditional customer archetype may be the woman selling pepper in the market, many of these customers have children in university, demonstrating a demand for more comprehensive financial services.

With a customer base of 6 million, LAPO is entering Nigeria's competitive digital banking arena alongside established players such as OPay, PalmPay, and Moniepoint. Although LAPO is a later entrant, its extensive physical presence across 34 states, long-standing experience in credit disbursement, and existing cashback reward programs are notable competitive advantages, according to the bank's executives.

LAPO's strategy combines digital innovation with its proven in-person services. "Our physical branches remain crucial for financial inclusion," said Oluremi Akande, director of marketing and communications. "While we're expanding digital services, many of our customers still require in-person financial literacy programs and community support."

The bank's ambitious plans include expanding loan disbursements from ₦237 billion in 2024 to over ₦400 billion in 2025, leveraging its app to provide "better and faster" loans. Loan amounts will range from ₦20,000 to ₦50 million, with monthly interest rates between 2.9% and 3.5%, depending on customer profiles.

However, digital lending is not without its risks. For instance, Techstars-backed Blackcopper, which aimed to provide collateral-free loans to Nigerian SMEs, ceased operations in 2024 under the weight of ₦1 billion in debt, citing issues with customer KYC compliance and repayment difficulties. In response, LAPO MFB is adopting a cautious approach: it will start with smaller digital loans and gradually increase lending limits for borrowers demonstrating a strong repayment history.

To further ensure effective risk management, LAPO is forming partnerships with credit bureaus, such as CRC and First Central, while utilizing its proprietary data to assess creditworthiness. "If customers have defaulted elsewhere, we will know before lending to them. For new users, we will review all available data," Koldsweat explained.

LAPO is strategically positioning itself to cater to both its core market and attract a younger audience by combining its long-standing reputation with new technological capabilities. As user inertia and stiff competition from digital-only fintechs present significant challenges, LAPO's thoughtful rollout and hybrid strategy could prove critical in redefining its brand in the modern financial ecosystem.

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