A worthy approach to digital lending


DB: Dignity isn’t often the lens through which we talk about financial inclusion; Why is dignity so important?

FW: People just want a good life with their heads held high and a sense of dignity so that their families can lead decent lives. Living with dignity often requires going into debt at some point. Debt is sometimes portrayed as something you shouldn’t have and when you are in debt you simply are not a good planner or you are trying to take advantage of the system and you don’t plan on paying back. But we find that people don’t get into debt because they bought jewelry or went to town; Rather, they try to give their children a better life. They are trying to do some basic things to show that they are leading their lives with decency and dignity.

In fact, certain types of debt are associated with ambition and characterize the type of ambition one has. This is especially true for those with low and middle incomes. For example, if you come from a lower income family and have student loan debt, it means that you are investing in your future. If you are a middle income and have credit card debt, it may be a sign that you are growing up. It’s important to remember that debt can be an important step on the ladder of economic mobility.

DB: If I’m a fintech looking to get into this field, how do I put the concept of dignity into the practice of serving my customers?

FW: News is the key. To what extent does your repayment language signal to your borrowers, for example as a fintech, that they are a bad player? Or do you signal that they are good people who have found each other in difficult circumstances? If you switch to positive framing, the consumer will be more willing and more likely to repay; You enter into a different kind of relationship that is no longer entirely opposing.

Try to understand the “cost of coordination” for the consumer, especially low- and middle-income borrowers. People’s schedules are less stable than they used to be. When people are asked to do a series of activities to take out and pay off loans, it becomes more difficult for them to feel in control. When they feel out of control, they are less likely to respond positively.

Certain types of interaction styles can make a customer feel disrespected. Providers should take the time to speak to people who have had difficulties with their financial services provider in the past. By asking someone, “What did other financial services providers tell you that helped you pay off your debt?” You are indicating that customers have a say in how they interact. This can lead to better relationship building between the customer and the provider. It’s not about letting people go from their obligations, it’s about recognizing that they are people with good intentions who may have made some mistakes.

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