More than just a Loan...

Shiona Crichton - Moneyline CEO

31st May 2024

More Than just a Loan  

A loan is a big part of what we do as access to cash is what someone needs when they first apply to Moneyline. We offer a loan product that we believe matches the needs of the customer segment we are here to serve. 

But we also believe in offering more than just a loan to our customers. Our mission is to improve long-term financial resilience and overall financial inclusion. In this blog we will look at the product attributes we offer to make sure our product matches our customers’ needs and the holistic approach we take to support our customers beyond the initial loan. 

According to the Fair4All Finance segmentation model there are 17.5m people who are experiencing financial vulnerability and 7m who are financially excluded in the UK. Moneyline only offers products that match the needs of a sub segment of those and that is approx. 2.5m people. 

Our Customers  

Our customers tend to have a household income below £20,000, receive some benefits and have different income sources during the month (known as lumpy income). They tend to live in rented accommodation and have a very low credit score. They usually budget weekly to make sure they don’t run out of money by the end of the month and often pay for things in cash, leaving a low digital footprint. All this complexity added together means they are excluded from a world where more and more decisions are made digitally and rely on having consistent digital data to do that. 

Our customers need small amounts of credit, which is the market that has been decimated (if you haven’t already, check out the earlier blogAPR – The elephant in the room hasn’t gone away’). But more importantly, they need products and customer journeys that meet their needs, not just any credit.  

They need to be offered products with lots of flexibility to help them stay on track with their loan. We know that many of our customers will be late with or miss a payment at some point during their loan so we offer self-cure periods (pay within 5 days and it’s like you paid on time) and payment holidays (a set amount of holidays you can take during your loan with no extra interest charged and no missed payment marked). We also know that our customers often have lumpy income, so we offer 4 different payment frequencies for our existing customers and are trialing a flexible payment method, VRP (more on this in blog 5).  

We encourage good payment by offering a 2% cashback if no payments are missed and we offer reduced interest rates for returning customers who have good payment history with us. All these things added together, alongside 4 different ways to communicate with us, add up to a product and service that supports the needs of our customers and means we can offer loans to those that are often excluded. We need to grow the subprime credit market, but with products and customer journeys that do meet the needs of the customers – not blame the customer when they struggle with standard payments or digital only journeys. 

But the loan product on its own doesn’t improve the long-term financial resilience, we have other wraparound services to help with this. 

Income Maximisation 

There is £23bn of unclaimed benefits! One of our primary goals is to ensure that our customers have access to all the income they are entitled to and to help them minimise their costs. Over the past year, we have integrated the Inbest income maximisation tool into our website, this tool helps applicants discover potential additional income or grants. Available in multiple languages, this tool has made a significant impact, with many customers discovering extra income sources.  

"Mr. F called and wanted to thank us for helping explain about our benefits checker, after using the checker he is now £400pm better off and is expecting back pay".​​​​

Encouraging Savings 

While borrowing is a critical service we offer, we also encourage our customers to save. Our “Round It Up” product has been a success since its launch in 2005, with £15 million deposited by customers who were initially not in the habit of saving. We find that regular savers are more likely to repay their loans on time, have home contents insurance, feel more financially confident and often need to borrow less often! 

 Providing Digital Assistance 

Digital engagement can be a barrier for many of our customers. We have a dedicated team helping those who are digitally shy or lack digital confidence. They assist with accessing our app, completing applications, setting up online banking and creating email accounts. By offering personalised support in small, manageable steps, we empower our customers to navigate the digital world confidently. 

"This morning, I was able to login into Moneyline and see my balance. The phone call this morning propelled me to step out of my comfort zone. These kinds of things make me a little nervous but thanks to you I am embracing technology and getting confident. You really galvanise people with your fantastic energy and unbridled passion for your work. The digital world doesn’t seem as daunting with your encouragement and support. You make a real and tangible difference".​

Additional Initiatives 

Last year, we secured a grant from NatWest through Responsible Finance, allowing us to issue small hardship grants ranging from £50 to £100 for essential needs.  

"N had given birth prematurely and the travel cost to and from the hospital meant she was struggling to pay for travel and keep up with her bills. The grant helped her with travel costs to see her baby for the next week". ​

Although this initiative is not ongoing, we continue to seek funding to provide similar support.

Additionally, our newly launched cost calculator will help customers understand the financial impact of missing or making early payments, giving back control of choice to the customer. 

A significant focus for us is on customers we have to decline. Many of these individuals might turn to illegal money lenders or higher-cost alternatives. To combat this, we have developed a decline portal in partnership with Inbest. This portal aims to support those who cannot access a loan by providing them with alternative resources and guidance and our next blog will be dedicated to this. 

 The Bigger Picture  

Fair4All Finance recently highlighted the supply gap in the subprime credit market. It is crucial that this gap is filled by lenders who prioritise positive outcomes for their customers. 

We are part of the Responsible Finance sector, which focuses on offering a variety of products, tailored to the needs of financially excluded customers. The sector’s 2024 impact report provides detailed insights into the positive outcomes delivered. However, the personal lending sector is vastly underfunded and needs access to more capital if it’s going to be a bigger part of the solution in filling this credit void. 

We hope to see similar reports to the Responsible Finance Impact Report from ABCUL to understand the full impact of community lending in the UK and understand the gaps with more clarity. We believe it is really important that the two sectors work together to close the gap in supply of relevant products and wrap around services needed for low-income households. 

Feel free to reach out with any questions or comments. Let’s continue the conversation about financial resilience and responsible lending by either leaving a comment or contacting me directly by email at  shiona@moneyline-uk.com

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