Momentum launches online roll-out of new personal loans platform
Momentum plans to establish itself as an unsecured lender and has launched an online roll-out of personal loans and consolidation loans.
A quarter of Momentum’s existing clients already held a personal loan, indicating that there was demand for loans, said CEO of Momentum Loans Hema Morar. "We believe they can be better managed as part of a holistic financial plan within the Momentum ecosystem," Morar said this week.
Momentum Loans is part of a joint venture between African Bank and MMI to extend Metropolitan-and Momentum-branded unsecured loans to the market. It also represents Momentum’s maiden foray into consumer lending and could be the first step towards offering transactional banking.
This comes as the business models of banks and insurers increasingly resemble one another, as banks such as First National Bank offer insurance and investment products, and insurers such as Discovery launch banks.
Momentum would offer loans of R10,000 to R200,000, for a term of 12 to 72 months, Morar said. Interest rates were based on each client’s individual risk profile.
"We are targeting our offering at a lower credit risk client than traditional credit providers [and] expect our average interest rate to be quite competitive relative to the market," she said.
Momentum Loans’s offering — consisting of personal loans and consolidation loans, whereby multiple loans were consolidated into a single loan — would be available to all consumers.
"It is not our immediate strategy to directly target our existing clients for consolidation. This may be something we consider for the future should we find client appetite for this," Morar said. Where a consolidation loan made sense for a particular client, he or she would have the option to switch, she said.
"Over the longer term we plan to embed lending into our financial wellness advice recipe together with our insurance and savings solutions as well as a comprehensive range of debt management tools."
Momentum Loans aimed to reach a lending book of R5bn within five years.