Nigerian multinational commercial bank, Access Bank Holdings plc has received the Central Bank of Nigeria (CBN) approval-in-principle, to establish a consumer lending subsidiary to be known as Oxygen X Finance Company Limited.
The bank announced that the proposed subsidiary will make a positive impact on the financial landscape by providing innovative and seamless digital lending solutions to address distinct challenges faced by businesses and individuals.
The proposed subsidiary will commence operation upon obtaining the final operating license from the Central Bank of Nigeria.
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Access Bank Holdings’ launch of a lending subsidiary is the second diversification the company is making after a week ago, it announced the acquisition of Lagos-based Megatech Insurance Brokers.
Both of these are part of the corporation’s plan to branch out from core banking into new areas within the financial services sector in a bid to diversify and grow more revenue.
With the launch of Oxygen X, Access Bank seeks to target micro-SMEs and retail customers including lower and middle-income salary earners as well as self-employed individuals as its clientele.
According to its 5-year strategy document, the lending subsidiary product offerings encompass traditional consumer and SME lending (asset and device, financing, personal loans, working capital financing), emerging consumer lending (Buy Now Pay Later, savings & investment products, and value-added services.
While other lending companies in the financial services space have focused on fintech, Access Bank holdings has become the first to make a play for standalone digital lending with the launch of Oxygen X.
The bank’s lending subsidiary (Oxygen X) will look to compete with digital lenders like Opay and Carbon in the growing consumer lending industry in Nigeria.
The consumer lending industry in Nigeria, is reported to be growing at a significant rate. It is worth noting that in the first quarter of 2023, the Central Bank of Nigeria disclosed that Consumer credit in Nigeria rose by 1.3 percent to N2.35 trillion, from N2.32 trillion in the previous quarter.
Personal loans constituted a substantial portion, totaling N1.75 trillion or 74.5 percent, while retail loans accounted for the remaining 25.5 percent at N598.3 billion.
Also, other Depository Corporations (ODCs) contributed about 7.8% of consumer credit in Q3 2023. Based on the sectoral distinction, these ODCs constitute mostly of fintech lending startups, microfinance banks, and players in the alternative lending market, among others.
Financial experts have stated that the surge in consumer credit in Nigeria, is indicative of the evolving financial landscape in the country, with fintech playing a pivotal role in expanding access to credit and formal financial services.