We don't need no education
Just simple finance products...
So in our fresh and fruity interview this week we spoke with Bohus Pokšteflt, the CEO of Kontentino, who are making social media planning easier using a simple intuitive interface that doesn't require a PhD for ordinary people to use. My question to you is this: why aren't financial services so accessible given that we all have money and have to find a way to make ends meet each month? As a bit of background, before I moved to Bratislava and before my career at a Fintech startup in London - but after my early years growing up in Silicon valley, the tech capital of the world and where I developed a very non-british accent - I was a researcher and published numerous reports on how low-income people use - or at least try to use - financial products and services that aren't designed for them. My final piece of research for the Centre for Social Justice was entitled Future Finance - a new approach to financial capability, which focused on how FinTech can be used to improve the lives and financial situation for ordinary people. That is because in the UK there is a lot of talk about FinTech and a lot of investment and media attention is focused on the latest and greatest FinTech apps, digital bank accounts and other innovations. These things are all great, but they don't necessairly make financial products easier to use. This is especially true for people who are on low or medium incomes, or who have little formal education, which can make choosing and using financial products particularly confusing. For me, the most important innovations are when FinTech makes it easier for ordinary people to use financial products and services, as well help them manage their money on a day to day basis to improve their financial situation. At Žltý melón there are several great examples of this. For starters, we have done a lot of work to make the benefits of p2p lending accessible to everyone. This starts from the moment a user registers on our platform, either by applying for a loan or registering as an investor. Our registration process and our entire user interfaces is built upon the concept of 'natural language' This means that people don't need a high level of technical expertise, or any knowledge about the complicated financial terms used by banks in order to borrow or lend money on our platform. Secondly, our new short-term loan is specifically targeted at people who are financially responsible, but for a variety of factors have become trapped in a cycle of high cost borrowing and debt. These people typically rely on loans from lightly regulated and expensive non-stanard lenders, because they cannot get a traditional loan from their bank. Our short-term loan is not only simple, straight-forward and cheaper than the loans these people have had to rely on in the past, but we have also designed it to help them improve their financial situation over the long term. Not only can they use our short-term loan, which has an APR of just 26% and can be repaid in affordable instalments over a period of 1-6 months, to get out of the cycle of high cost loans. But we also monitor their repayments of the loan with us to help them build up a form of 'credit rating', or 'trust' as we prefer to call it, with us and our community of investors. This means that even though their history of credit use or current financial situation will often exclude them from getting a traditional bank loan, good repayment of thier loan with us means we can help them get a bigger and cheaper loan from our investors in the future. This can be used to refinance their existing debts and expensive loans, or just to affordably remodel their home or buy a new car. Anyway, those are just two examples of what we are doing not to 'educate' people about financial services, but to actually design better financial products and services for ordinary people, which will help them manage and improve their financial situation. In the coming weeks we will be talking a lot more in this blog series about financial capability. Specifically, how innovative financial services like Žltý melón can truly be designed around people's needs, wants and lifestyles. Rather than being designed around the needs and lifestyle of banks' CEOs and their shareholders. See you next time!
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