Ngozi Dozie, the co-founder of Carbon, one of the licensed digital lenders in Nigeria, has said that the new Google policy banning loan apps from accessing their customers’ contacts and photos will favour banks at the expense of fintech companies.
Dozie explained that even though the policy was well intended, it could stifle innovation and impede the efforts of fintech at driving financial inclusion. According to him, the policy puts fintech startups at a disadvantage to the benefit of the ‘Big Banks’.
“Why the different treatments? The distinction between lending apps and digital banking apps is disingenuous; a bank, which Carbon is, by default lends. Therefore, all banking apps are by default lending apps, broadly speaking.
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“There is a grave danger that what started as a positive action will stifle innovation and hurt the smaller companies that are doing God’s work in financial inclusion. What’s worse is that there is already an uneven playing field between the fintech Davids and the Big Bank Goliaths.”
Dozie, however, admitted that some loan apps have been abusing the access to their customers’ contacts and photos, which necessitated the policy from Google. According to him, before now, Google has been responding to the abuse by progressively restricting access to personal data on the phone – along with Apple.
“Certainly in some emerging markets including Nigeria, I suspect the abuse of this data by many lending apps acted as a main driver. It works like this:
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“Customer download a lending app to borrow money; a precondition for the loan is providing access to their contacts and photos. If the customer defaults on a loan then to shame the customer to repay, the lender sends some or all the contacts of the borrower message.
“Clearly, this practice is abusive and goes against all privacy laws; Google is right to reduce the invasion of privacy. But in implementing this policy with not enough nuance, Google is cutting the legs off from some of the more innovative companies that are doing the Lord’s work, like Carbon,” he said.
Although Dozie issued a caveat that the blog post represents his personal opinion and not the position of Carbon, he said the lending company has no option but to comply with Google’s directive as the platform remains its main source of customer acquisition.