Micro-loans are small loans that are issued by individuals rather than banks or credit unions and have become increasingly popular with banks becoming stricter with loan requirements.
Often, microloans are given to people where traditional financing is not available, to help them start small businesses. Lenders receive interest on their loans and repayment of principal once the loan has matured.
Because the credit of these borrowers may be quite low and the risk of default high, microloans command above-market interest rates making them appealing for some investors.
Why micro-loan companies need SMS
These companies are issuing billions in loans each year and with this sort of scale communication between parties can be problematic but with SMS, the lines of communication between these two sides can be fast and proficient. So how can micro-loan companies use bulk messaging? Here are a few ways they can use SMS
Use SMS to market and promote the type of loans and interest rates you have on offer. SMS is an excellent way to promote your services and get beneficial publicity and drive immediate interest.
2. Loan application received
SMS can be used to send confirmation towards your borrower that you have received their request. Keeping them informed on how far their application is will limit the contact ratio and allow your customer service team to concentrate on more important queries.
3. Loan application approved
Because 98% of SMS’s are opened within 3 minutes of receiving it, letting your borrower know that their application has been approved has great benefits. This helps your lending service seem effective and fast, as well as improve the communication between lender and borrower.
4. First payment due
Using SMS to remind your customers that they have a payment due ensures that they are aware that they need to make a payment and when they need to make the payment by and improve your repayment rates.
5. Payment in arrears
This type of SMS keeps your customers in the know regarding how much their payment costs, any penalties they may incur and encourage them to service their loan. It also makes sure that all parties are informed regarding how much is owed and the need to make the proper arrangements to pay it.
6. Loan default
In the financial sector, a loan default is the failure to meet the legal obligations (or conditions) of a loan. Informing your client through SMS that the conditions of the payment have not been received, allows for the problem of non-payment to be handled faster and without additional issues.
7. Loan payment complete
This SMS can confirm that you are both in agreement that the loan payment and transaction is complete and successful. This once again shows how efficient and professional your service is. By informing your borrower every step of the way, keeping you both on the same page.
8. Loan balance remaining
SMS can be used to remind the borrower how much of their loan balance still needs to be paid and create a better sense of urgency. This ensures that the is no miscommunication regarding how much still needs to be paid and that all parties are in agreement regarding how much needs to be paid.
9. Customer satisfaction surveys
You can also use SMS marketing for post-purchase data collection by sending users of your service a link to an online survey on your site or to a survey hosted using USSD. These types of follow-up studies can help improve your service and lead acquisition in the future as well as for data modeling and customer profiling.
10. Refer a friend
Sending out an SMS to clients who have used your service in the past and asking them to refer a friend can help you reach leads you would not normally have obtained through your other marketing efforts. Word of mouth is still one of the most efficient ways of marketing and having a friend endorse a brand or service can help bypass cognitive dissonance easier than advertising can.
SMS improves communication
Keeping the lines of communication open and effective, especially when finance is involved is always necessary to ensure that all parties are on the same page and in agreement.
Using SMS as one of your tools in order to market your services and communicate with your current clients can be very beneficial and strengthen the relationship between the borrower and lender.
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