NEOBANKS: LENDING
2020: ENTERING A NEW DIMENSION
Curve’s timewarping technology has already given account holders a unique way to manage their personal cash flow. The startup’s latest tool further expands the financial management universe. Head of Curve Credit, Paul Harrald, explains why it’s boldly going into lending... With the global pandemic playing havoc with people’s financial stability and employment status, and buy now, pay later (BNPL) credit models such as Klarna, Clearpay and Laybuy coming under fire for pushing people into long-term debt, the issue of responsible lending has never been more pressing. Technology has made consumer lending incredibly slick. Customers enjoy near-instant credit checks facilitated by a diverse range of data feeds, including www.fintechf.com
those powered by open banking connections. The rise of BNPL payment options at website checkouts also means it can now take just one click to make a purchase. BNPL apps are a preferred payment method for online shoppers worldwide. More than 85 million users in 17 countries are clicking on Klarna alone. But consumers may not always appreciate the distinction between buying and borrowing in this blurred reality, and that’s where the possibility of taking on unaffordable debt arises. Now Curve, the London-based fintech that consolidates multiple cards and accounts into one digital card and app, is attempting to set ‘the gold standard in responsible borrowing and lending’. Using its unique ‘back in time’ function, customers can choose to switch any transaction made on any connected card at any merchant, at any time, into a Curve Credit instalment plan in a single app. Curve Credit has been designed to simplify the borrowing experience to ensure that consumers do not burden themselves with debts they cannot afford to repay. Curve will tell them if they're building up too much credit
and let them know if it thinks their next splurge is a bad idea, much like any other deferred payment scheme. The key difference, however, is that it’s the customer’s Curve account that is extending the credit (currently financed from Curve’s own balance sheet) and there is no pressured point-of-sale decision presented by a BNPL lender. Also, unlike other BNPL finance tools, Curve doesn’t require merchants to directly support Curve Credit as a payment option at the checkout. Credit has been getting some negative press lately, but for head of Curve Credit, Paul Harrald, consumer lending is almost always a force for good and ‘an astonishing enabler’. Done well, he says, lending holds unambiguous value for society, but irresponsible lending or borrowing decisions do not. “If I were to level any criticism at credit cards, it would be that people can accumulate debt, whereas what they thought they were doing was just transacting and buying things. “I think there has to be a limit to the ease with which credit can be taken out – almost an artificial limit – because it needs to be undertaken thoughtfully, in my opinion. Issue 7 | ThePaytechMagazine
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