Having looked at the pros and cons of digital mobile loans to a consumer in a previous article and the strategies employed by investors to keep reaping from the said financial sector here also, we shift our focus to the actual use of the borrowed funds from all these applications. There has been a high presumption of a correlation between the rise in sports betting popularity locally and the ease of access of app-based digital mobile loans from fintech companies.

According to a recent study done by the Institute of Economic Affairs (IEA), the relationship between the above mentioned two is not as anticipated or feared by many in the society. In fact, the IEA revealed that betting is among the least of needs that consumers borrow for whereby many seek the funds for business investment, day to day needs and educational purposes.

Mobile lenders are in a better position to track the spending habits of a customer than their non-digital counterparts and they use these analytics to gauge the eligibility of a borrower and their borrowing capacity. The study by IEA was supported by these mobile lenders by giving up this information about their customers as they are able to track their customer spending habits.

The above sustains the revelation that the average default rate among digital lenders stand at 9.4% while that of bank mobile loans stand at up to 18% thus falling way below the loan default rates for general digital lending which stands at 12%. In as much as the IEA findings show that mobile loans are hardly to blame for the rapid rise in betting especially among the youth, regulatory intervention is a necessity as they carry similar consumer risks that ought to be addressed through regulation.

Mobile lenders and betting firms have been able to gain access to a large volume of consumer data and with no regulation unlike in the banking sector, raised concerns among consumers in the data’s application and security. The IEA said that the policies have to be normalized in the two sectors whereby there is lending and submission of information for financial transactions on digital loans and betting.

Stay connected to our blog for more on this series of digital mobile loans and lending.