Hey @Flame27 thanks for reaching out and welcome - dig the username
You may well have read the AFR article re Latitude https://www.afr.com/chanticleer/latitude-s-fail-is-a-debt-turning-point-20191016-p531am
Interesting question re BNPL…We will definitely not launch a credit card - whilst some people use them well to their advantage, as our CEO Eric says (#xinjamaker) credit cards are design such that the only way the bank makes money is if the customer makes a mistake.
We love the idea of ongoing transactions being used to assess a credit risk as this is a great win win; we’re also interested in personalised rates so that we use the customer’s own data (transactional history as you say) to assess the risk & deliver the personalised rate. This gives the customer a fair and often sharper rate and protects the bank, so we like this model. It would take us a while to get there - we won’t have enough data for a while - but that is exactly the sort of territory we are aiming for. Moven, the US neobank, has the notion of a pre-approved line of credit which is dynamic.
There is a fine line here however.Whilst having a pre-approved line of credit available when you need it is handy, would it encourage people to borrow? Remember the days when you’d get the random communication from the banks saying ‘your credit limit’ (on those darned credit cards often…) ‘has gone up to x’. We’re about encouraging people to do the right thing with their money, and encouraging them to save rather than spend, and in many cases borrowing might not be a good idea. As to BNPL, there is a pretty furious debate on this as well. Whilst it doesn’t have the punitive charges of credit cards, the access to instant funds might encourage sub optimal financial habits? Is it too tempting?
There’s an interesting product we came across called Sipora which describes itself as ‘before pay’ in other words, encouraging people to save for an item and buy it when they have the money, and releasing a benefit (like a discount) in so doing. We think this model could be really interesting and beneficial to the customer.
So, the exact details of our lending products next year are to be defined, but let’s keep the chat going - loved your idea re the alternative BNPL model. Particularly the dynamic payment amount to help them get rid of it quicker.
Many thanks! Cam