Member Spotlight: Wisr, Purpose-led lending
Anyone can tell you that the first step to developing a successful fintech business is to identify a problem that needs to be fixed or fill a niche that needs to be filled. However, you need to go beyond the immediate and think about the longevity of your business. What differentiates businesses in the market, particularly in areas such as lending, is that purpose is king.
Wisr is one such company, Australia’s first ‘neo-lender’, that is built around a purpose to deliver financial wellbeing by helping Aussie’s access fairer credit, pay down their debt sooner, and better understand their financial standing.
The incumbent Australian financial institutions produce models and products that make money from customers not paying back their debt, keeping them in the debt cycle for longer. Wisr recognised that without access to transparent information, behavioural changes and insights, Australians could keep making the same mistakes with their financial choices – especially if they had low financial literacy. The most recent Household, Income and Labour Dynamics in Australia suggests that only 55% of adult Australians identify as financially literate.
Wisr has re-defined the value chain for customers – extending the traditional role of what a lender does into a completely different model, what they call the Wisr Ecosystem model. One that connects with customers at all stages of their financial journey.
This starts with Australians understanding their financial position and credit history. Credit scores are largely misunderstood and represent a portion of Australia’s financial literacy gap. A Wisr survey of almost 5,000 potential borrowers found 70% of people miscalculated their creditworthiness, with 60% worse off than what they had initially expected. WisrCredit allows users to view both of their credit scores from credit bureaus Equifax and Experian, so they can understand their creditworthiness and improve their financial fitness.
While understanding is the first step, taking action is often the hardest part. For many Australians paying off debt and making long-lasting behavioural changes is not easy, especially without knowing where to start. The spare change, digital round-up tool, Wisr App pays down customers existing debt while changing their future spending behaviours through nudges and insights; creating successful financial habits for the long term with small, regular steps.
“A Wisr App customer can become more aware of their daily spending which helps them to make an informed decision on how best to use their money”, says Anthony Nantes, CEO at Wisr. “The app helps the user pay off their debts faster, so we are building better habits, in fact almost a million dollars in customer debt has been paid down through the Wisr App in the last few months.”
Finally, Wisr uses its proprietary technology to offer better access to fairer credit. Through an entirely online process that reduces complexity and increases transparency, Wisr offers personal loan products for any worthwhile purpose, with no early exit or repayment fees, and that are on average 5% lower than the Big Four.
The ‘Wisr Ecosystem’ enables the company to build a better relationship with their customers, one backed with purpose and compassion whilst also educating users about their finances for the long term.
This purpose-led model has proven beneficial for Wisr’s loan book, despite tightening their credit policy in response to the pandemic. The company has reported in their June ASX release that they have returned to pre-COVID-19 loan origination levels, an average credit score of 712, with the Australia average being approximately 600 (according to Equifax), and customer support requests have also returned to pre-COVID-19 levels applications.
Wisr will be able to take their purpose-model even further with the Consumer Data Right. The company is also very supportive of the use of data intermediaries, an area of the CDR which is currently under consultation by the ACCC. “The CDR will open up data tenfold”, says Mr Nantes, “by using intermediaries we will be able to concentrate less on the data transfer, and more on the customer experience as well as product and job creation.” The CDR is consumer-centric, with the consumer being the ultimate data custodian by virtue of the CDR’s consent mechanisms. This means that any data-driven business needs to keep the customer at the forefront of their mind when developing products and services since they will be driving data transfers within your business.
However, Mr Nantes says that industry support of the CDR is not enough to drive widespread market adoption. “No matter how valuable the CDR is for industry, it will not see adoption unless we have consumer support from the bottom up. Crystal clear education is key to driving this support. At the moment, the information available isn’t as easily digestible as it could be. Consumers should be empowered with easy-to-digest information, so that they can confidently decide who and how they share their data with.”
Wisr recommended in their 2018 submission to the ACCC on the Rules framework that the CDR should be implemented in a phased approach so as to make it as accessible to as many responsible participants as possible; an approach that has been adopted in the regime’s rollout.
The implementation of the CDR will support Wisr’s purpose-model even further, by making it easier for a customer to get a better deal, creating new behaviours for the better through personalised insights, as well as improving their financial literacy, especially in COVID-19 times.
As we slowly enter the recovery phase of the economy, taking such an approach to lending may be the most prudent way forward, both for the health of lending businesses and loan books, and the financial wellness of all Australians.