Passionate about innovating and breaking the barriers of financial exclusion, Sol Enenmoh (Head of Digital Transformation at Vanquis) is eager to encourage the finance sector to think differently and adopt new ways of working.
Prior to his role at Vanquis, he’s worked in transformation leadership roles in large organisations, including EY, HSBC, NatWest, Lloyds, and bp (Retail and Payments division), driving commercial success through changes in culture, channel shift, capability uplift, and process changes.
Here Sol explains how Vanquis’ partnership with credit builder LOQBOX is rooted in a need for greater financial inclusion.
Working in the banking sector is more than providing financial services – it’s about people. Over the past 18 months, there’s been a dramatic increase in the number of people needing help. Over nine million people were put on furlough, many lost their jobs, three million of the self-employed relied on government grants, and many had to take payment holidays on their credit cards and mortgages to get by day to day.
In the UK, 1 in 5 adults are typically declined for credit by mainstream lenders. That’s approximately 12 million people who are excluded by the big-name banks, yet still require access to credit. These people might have experienced a significant life event impacting their finances, such as a divorce or job loss, or they might simply be managing life on a lower-than-average income. For people who are new to credit, it’s a catch-22. Mainstream banks aren’t confident in lending to people with little credit history, so how are they supposed to build it?
This is where Vanquis sits in the market. We offer products to people who are typically declined credit to help them move forward in life. Unfortunately, we can’t offer credit to every person who applies as it might not be in their best interest at the time, and in some cases, it might cause further financial detriment. For those struggling, this can cause high levels of uncertainty and anxiety, and it can feel like they are left without choices. However, whatever their circumstances may be, no one should be left in the dark and their journey shouldn’t end there.
Everyone should have the opportunity to access tools and services to support them financially.
Through partnerships, we can extend our offering and make sure no customer is left behind. In early 2021 we partnered with LOQBOX to give declined applicants a tangible next step to build their credit score and improve their financial habits. It’s the first partnership of its kind in the industry where a lender will signpost an alternative, appropriate solution rather than ending the journey there with little clarity on the next steps.
Taking this route with LOQBOX puts the power back in the customer’s hands and offers a chance for them to build their credit profile. They decide on an amount they can afford to save in a year (through a minimum monthly payment of £20 and maximum £200), a 0% loan for this amount is locked away with LOQBOX and they pay it off over 12 months. When customers make their payments on time and demonstrate good habits, this is reported to the credit reference agencies and contributes to building their credit score. Once the year is up, the money saved is released into a bank account. Vanquis and LOQBOX regularly touch base with the customer during this time, and when it’s believed they have a better chance of approval for a Vanquis card, they will be recommended to reapply.
We share the view with LOQBOX that financial education plays a fundamental part in tackling financial exclusion. As LOQBOX customers, they have access to a whole host of resources to help improve their money management, get them back in financial shape and achieve their goals.
The first customers that were referred to LOQBOX are now several months into their journey, so we have a robust set of data to examine. For example, it will indicate how customer behaviours may have changed, what impact it has on their credit score, and the next best actions, which may be to re-introduce them to Vanquis.
Looking into the future
Given that government support schemes are coming to an end, we’re likely to see even more people needing extra financial support. Now more than ever, businesses need to work together to come up with innovative ways to help people.
Our partnership with LOQBOX demonstrates the value of fintech partnerships in addressing key social issues. Finance isn’t a one size fits all approach and they are built in a way that allows for a more flexible, tailored service to address the needs of underserved consumers. Fintechs often operate in a more dynamic way and have fewer limitations with things like existing processes, allowing them to deliver projects and new products at a faster pace. They’re able to respond and adapt quickly to changing landscapes, which has been particularly valuable throughout the pandemic, bridging gaps that typical financial services providers would have struggled to.
Working with LOQBOX, we have been able to continually evolve our partnership model. We learned more about how it works and its value in the first few weeks of going live than we did debating the theory and discussing rigid commercial KPI’s pre-launch. It highlights the importance of exploration and experiments with new products, partnerships, and ways to support people financially.
There’s a long way to go to end financial exclusion. Taking on these lessons learned and being open to new ways of working, allows us to be more innovative in bridging the gaps to better serve the 20% who are currently financially excluded. We’re looking forward to identifying new opportunities and new partnerships to tackle more financial barriers for UK consumers.