VisionFund taps savings groups for digital credit growth
DAR ES SALAAM: VisionFund Tanzania Microfinance Bank is turning savings groups into a new pipeline for digital lending, allowing members to leverage their deposits to access collateral-free loans while cutting the cost of selected digital transactions.
The lender is betting on digital banking to expand beyond its physical branch network as competition for underserved customers intensifies, with the launch of its VFT Smart Banking App.
Chief Executive Officer Mr Rogathe Godson said the strategy was designed to bring banking services closer to customers where they live, work and conduct their businesses.
“The strategy is aimed at taking banking beyond physical branches and bringing financial services closer to customers where they live, work and conduct their businesses,” he said yesterday.
The bank’s Chief Operating Officer, Mr Deogratius Siria, said the app’s key innovation, the Dunduliza Group Account, could transform traditional savings groups into a more accessible source of credit.
The account combines the savings discipline of traditional VICOBA groups with digital records and automated transactions, providing greater visibility over contributions, borrowing and repayments, he said.
Under the model, members can borrow up to three times their savings without collateral, while digital processing is intended to shorten the waiting periods associated with traditional group lending.
The bank charges 4 per cent a month on Dunduliza loans, with repayment periods of up to three months, according to the lender.
Chief Financial Officer Mr Henry Horombe said high transaction costs remained a barrier to digital financial adoption, particularly among low-income customers.
The bank expects removing charges on selected transactions to encourage customers to shift from cash to digital channels.
Through VFT Smart Banking, customers can pay bills, government levies and Lipa Namba transactions without transaction charges, potentially increasing digital payment activity while lowering the cost of everyday financial transactions.
“Lowering the cost of digital transactions can help bring more underserved customers into the formal financial system and support the transition towards a digital economy,” he said.
For VisionFund, the strategy could deepen its lending base by converting established savings-group relationships into a pipeline of borrowers, while digital channels allow the bank to serve customers beyond its branch footprint.
The shift comes as financial institutions increasingly adopt digital platforms to lower distribution costs, widen customer reach and bring more low-income customers into formal financial services.
