For smaller credit providers and micro-lenders, accessing the technology needed to compete in an increasingly demanding financial services market shouldn't mean committing to expensive contracts or paying for services they may not use every month.
While fraud prevention, customer onboarding and identity verification are essential to running a lending business, the costs associated with accessing these capabilities can put them out of reach for smaller operators. Initiation fees, monthly minimum charges and volume-based pricing structures can make it difficult for businesses with relatively low transaction volumes to justify the investment.
SoftiDoc wants to change this, giving smaller credit providers access to the same technology used by larger lenders, without the financial commitments traditionally associated with technology providers.
Through its pay-as-you-go offering, businesses can register on the SoftiDoc platform, access an online dashboard and purchase credits as and when they need them. There are no registration or initiation fees, compulsory annual contracts or monthly minimum charges.
Jeremy Engelbrecht, founder and MD of SoftiDoc, says the offering responds to conversations SoftiDoc has been having with smaller credit providers and micro-lenders through its involvement with the Credit Association of South Africa, including industry conferences and roundtable discussions.
“What we're finding is that smaller credit providers want access to the same technology as the bigger players. Just because they're micro-lenders doesn't mean they want to be at the bottom of the pile. They want the same capabilities as bigger financial institutions, particularly when it comes to managing risk and preventing fraud. But pricing is a major consideration,” he says.
According to Engelbrecht, traditional provider agreements can be particularly difficult for smaller lenders to accommodate. Some providers require a minimum monthly fee covering a set number of transactions, with additional charges kicking in when that threshold is exceeded.
For a business processing a few hundred transactions a month, even a relatively modest fixed fee can have a knock-on effect on its acquisition costs and overall profitability.
“Every penny counts when you're a smaller business. The bigger players can absorb those costs, but for a micro-lender, every additional expense has an impact. We wanted to remove that barrier and make these services accessible without forcing smaller businesses into a financial commitment they aren't comfortable with,” he says.
Pay for what you use
SoftiDoc's model is designed to give businesses greater control over their technology expenditure.
Getting started is straightforward. Businesses can register through the SoftiDoc website or contact the company directly to express their interest. Once registered, SoftiDoc helps them set up their dashboard, configure the services they need and understand the credit requirements for each function.
The dashboard displays available credit balances and the cost of individual services in credits, giving clients visibility into what they are spending. Credits can be purchased online through Ozow, using a process similar to any other online purchase.
Importantly, businesses can start with a small amount, purchasing as little as R10 in credits, rather than having to commit to a substantial upfront investment.
“We set up the dashboard according to the services the client needs and show them how many credits each function uses. They can then buy credits when they need them and use the functionality available to them,” Engelbrecht explains.
The dashboard also provides a management and reporting function, allowing clients to review their credit usage and see what they have spent on individual services. Historical and current expenditure can be compared, helping businesses analyse their usage and plan future budgets.
This transparency is particularly relevant to smaller lenders that need to keep a close eye on operational expenditure and ensure technology costs remain aligned with business activity.
Access to the same technology, without the same commitments
The flexibility of the model doesn't mean smaller providers have to compromise on functionality.
SoftiDoc makes the same technology available to smaller lenders as it does to larger financial services businesses, allowing them to access the tools needed to strengthen their onboarding and verification processes without having to sign up for a comprehensive solution from the outset.
For example, when clients use the platform for ID card validation and facial biometrics, the liveness functionality is included at no additional cost.
Clients can also have their dashboards configured and white-labelled to reflect their own brands. They start with the services relevant to their operations, with the option to add further functionality as their requirements change.
The pay-as-you-go model is also intended to provide a pathway for growth. As a client's transaction volumes increase, its pricing can evolve accordingly. Businesses processing more than 5 000 transactions move into volume-based pricing, allowing SoftiDoc to accommodate their changing requirements.
In this way, smaller providers can establish their operations using individual services before progressing to a broader solution when their business justifies it.
Removing the barriers to getting started
Engelbrecht understands the reluctance smaller businesses can have when approaching technology providers. Having previously operated a smaller business himself, he says the financial commitments involved in accessing essential services can be daunting.
He recalls having to pay monthly fees and several months in advance just to access services such as bank statement retrieval, without necessarily having certainty around how much those services would be used.
“That can be incredibly difficult when you're starting out. You need these services to operate your business, but you're immediately faced with fees and commitments that you might not be able to afford. We understand that challenge,” he says.
Ultimately, the objective is to give smaller businesses the opportunity to compete on a more equal footing, with access to the same capabilities as larger lenders, while retaining the flexibility to spend according to their needs and means.
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