Banks lead loan checks as digital lending grows

Commercial banks strengthened their hold on Ghana’s credit bureau activity in 2024, accounting for more than four-fifths of all searches, according to the Bank of Ghana’s latest Credit Reporting Activity Report.

The data shows that banks conducted 13.52 million searches last year, representing 84.93 per cent of total enquiries, up from 77.38 per cent in 2023.

By contrast, the share of microfinance and microcredit institutions declined to 8.82 per cent, compared to 11 per cent the previous year. Savings and loan companies and other non-bank financial institutions also recorded fewer searches than in 2023.

The Bank of Ghana attributed the overall surge in credit bureau activity to the rapid expansion of digital lending and stronger compliance with data submission requirements by lenders.

In total, financial institutions and authorised users carried out 29.5 million credit bureau searches in 2024, more than double the 13.7 million recorded in 2023. This pushed the monthly average to 2.46 million searches, a year-on-year increase of 16.24 per cent.

Individuals made up the largest share of these searches, accounting for 55 per cent of all enquiries, while 44 per cent were linked to digital loan customers. This underscores the growing influence of fintech-driven lending in Ghana’s credit market.

The report also recorded a significant spike in loan data submissions, with credit bureaus receiving an average of 61.1 million records per month, a 190 per cent jump from 21 million in 2023.

Nearly all submissions (99.7 per cent) were linked to individual borrowers, a trend the central bank said reflects the rapid expansion of digital credit platforms.

According to the report, the increased use of credit bureau data is not only being driven by traditional loan processing but also by a wider range of financial activities, including Know Your Customer (KYC) checks, loan recoveries and customer risk profiling. The Bank of Ghana said this reflects a growing reliance on credit histories in decision-making across the financial sector.

The figures also suggest that the country’s credit reference system is becoming more deeply embedded in the lending ecosystem, as institutions seek to reduce risk and improve loan recovery rates.

The expansion of digital lending platforms, which offer quick, short-term loans through mobile applications, has further boosted demand for real-time credit checks.

The Credit Reporting Activity Report is released annually by the Bank of Ghana to track trends in the credit information industry and assess the performance of licensed credit bureaus.

The 2024 report highlights both the opportunities and challenges in the sector, including the need for greater coverage, more accurate data reporting and further integration of digital solutions to enhance efficiency.