<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting now with Wiehahn Koch, head of Purpose Lending at Capitec. Wiehahn, appreciate the time today. When we think about lending, when we think about debt, what often comes to someone\u2019s mind is that debt is bad, debt is risk. Those can be true statements, but they needn\u2019t be true; debt can actually be good, can have a purpose.<\/p>\n
WIEHAHN KOCH: Simon, thanks for having me and it\u2019s a pleasure speaking to you. I agree fully. What we do at Capitec is we\u2019ve taken to \u2018purpose lending\u2019. We believe that purpose-led credit really changes the thinking away from what we often term \u2018consumption lending\u2019.<\/p>\n
We believe if you, with the right mechanism, connect a credit product to a client with a clear life goal or life moment, as we call it \u2013 whether that be mobility, home improvements, education or even growing a business \u2013 the bottom line, when it\u2019s tied to something productive, is it\u2019s rather a financial tool than a burden.<\/p>\n
Read:
Could Optasia be the \u2018next Capitec\u2019?
Capitec to launch new lending product for SMMEs
Capitec to start easing credit-granting criteria<\/p>\n
SIMON BROWN: Absolutely. Some of those things, like education \u2013 obviously you come out smarter at the other end. It improves your job prospects; it improves your salary prospects. But even with just a loan for a vehicle, fundamentally that mobility can be good for an individual at home. These are simple things, perhaps, but can be life-changing in the right hands.<\/p>\n
WIEHAHN KOCH: That\u2019s correct, Simon. So if we take the one example of mobility, mobility far outreaches the normal traditional thinking of having a \u2018vehicle finance\u2019 product.<\/p>\n
Let me explain \u2026 We\u2019ve seen with purpose lending it is more accessible to more clients, meaning that these clients can get mobility or access to mobility, which all of a sudden leads to better job prospects because I can drive to my new job rather than commuting. It makes me more reliable. It increases my time spent either at work or with family obligations. Therefore the client\u2019s whole life fundamentally changes due to being afforded the opportunity to have increased mobility.<\/p>\n
You mentioned education. We know that an individual in this country studying towards something has greater \u2018earnability\u2019, as we call it, or prospects for better earnability in future\u2026<\/p>\n
But at least it\u2019s also someone who shows responsibility and wants to grow in life. And naturally that leads to either higher income or, at least in the economy currently, a sustained income, which makes them economically active and retains their economic status.<\/p>\n
So it\u2019s definitely created for those reasons and it\u2019s starting to make all the right noises to not be seen as an over-indebted, financially exclusive thing but rather one that says, if I look into the future, purpose lending connected to a life moment is really something that can propel me forward.<\/p>\n
Read\/listen:
Innovation and \u2018boots on the ground\u2019 help lift Capitec\u2019s profit
Capitec vehicle loans top R1bn
Capitec enters vehicle finance market, to launch access credit [April 2020]<\/p>\n
SIMON BROWN: This then kind of takes the entire sort of lending model and I suspect shakes it, because the old school way would be quite simple. I would arrive with a payslip, three months of bank statements and proof of residence for Fica. That would be the process.<\/p>\n
There\u2019s a lot more to it these days, of course. There are a lot of informal economies. There\u2019s a lot of side hustles and gig economies which need to be taken into account as well. And that whole process needs to shift.<\/p>\n
WIEHAHN KOCH: Yes, that\u2019s correct. What we\u2019ve learned from clients, specifically in the South African context, is that just a fixed monthly payslip and salary is no longer the norm. We do see various forms of income coming into clients\u2019 accounts which are not accounted for when they are applying for credit traditionally.<\/p>\n
If you look at the traditional approach, it excludes income that comes either regularly or irregularly, but is still income that has inflows into this client\u2019s account that are being ignored and for that reason are not being taken into account towards something more meaningful in their life to obviously take them forward.<\/p>\n
Listen\/read:
South African banks need to do more to ensure financial inclusion
Outdated lending caps driving borrowers to loan sharks
Credit rejections surge as micro-lenders call for urgent reform
How Capitec Business Banking is changing the SME landscape<\/p>\n
SIMON BROWN: I imagine my sense of Capitec is very much a digital-first bank. You have a lot of this information. You have a really good understanding of clients. That, I would imagine, extends beyond just flowing into it but how the apps are utilised, how the different products within the suite are utilised as well.<\/p>\n
WIEHAHN KOCH: That\u2019s correct. We are fortunate to have a large client base of 25 million South Africans, and we have a host of data that we can leverage to better understand the client\u2019s financial position \u2013 not just from the inflows, as we mentioned from an income perspective, but also the outflows, how regularly that happens, how the client transacts.<\/p>\n
That shows us a lot of the behaviour and instincts that could very much benefit the client.<\/p>\n
In a typical assessment you would historically look at a client\u2019s income versus expenses and arrive at some sort of affordability, whereas we now have a much wider view of this client. Seeing a client more holistically creates opportunities for us to ensure we give the client the right product, not only [for the] right industry or for the right purpose, but also at the right time, [while] understanding when clients have increased income or when they\u2019ve decreased income, to make sure that we don\u2019t only lend to clients, but we do so in a very responsible manner.<\/p>\n
SIMON BROWN: Yes, fit for purpose. Very much so. Head of purpose lending at Capitec Wiehahn Koch, I appreciate the time.<\/p>\n
Listen to the full MoneywebNOW podcast every weekday morning here.<\/p>\n
#Capitec #redefining #lending<\/p>\n","protected":false},"excerpt":{"rendered":"
You can also listen to this podcast on iono.fm here. SIMON BROWN: I\u2019m chatting now…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[4253,4255,4254],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/1795"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1795"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/1795\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1795"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1795"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1795"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}