Progressa

Ali Pourdad, CEO of Progressa, discusses needed solutions for the credit invisible and underbanked in Canada.

At Progressa, helps Canadians improve their financial future by providing a second chance at credit. Progressa reads between the lines to see the consumers' potential, and help build a loan. This means consolidating their outstanding debt, resolving overdue bills and getting the consumer back on track financially.

A Nov. 2015 Financial Consumer Agency of Canada report showed that outside of mortgages, credit cards and bank lines of credit are the most common forms of debt for Canadians.
What alternatives do the emerging innovative lending community provide to the Canadian consumer?
Opening up access to credit for the under-banked comes to mind. In the small business space, the Merchant Advance and in the consumer finance space, the installment loan, have both benefited from innovation in the alternative lending space.
In the US the Consumer Financial Protection Bureau (CFPB) indicated that 45M people lack a credit score. Of those, some 26M Americans are “credit invisible,” with no credit events on file. What would you estimate the equivalent is in Canada?
Far fewer number of Canadians would be in the “credit invisible” category if I had to estimate. Using Progressa’s historical application data alone, I would estimate under 3% (1M) of the population.
Progressa advertises that it will help borrower rebuild their credit profile. You have a six-month mile stone process. This remedial approach is very different from an incumbent lender?
Absolutely. Our mission is to build a socially responsible consumer finance company that encourages borrowing for the right reasons and that Canadians can be proud of. Offering automatic interest rate reductions to consumers with positive repayment history is 1 way we show this.
What is to stop recidivism with credit-challenged borrowers? Once you have positively rebuilt a credit profile, what happens if the consumer is laid off from the job? What happens if the borrower is injured or too ill to work?
We don’t assume credit-challenged borrowers will re-offend. Many Progressa customers have gone through a life event and simply need a second chance at borrowing. Loan protection insurance can protect from job loss, work injury, or illness & often can protect the consumers credit.
Why are incumbent lenders (banks etc.) failing this credit-challenged demographic?
We don’t see banks as incumbent lenders to our consumers. Banks turned their backs on these consumers many years before the credit crisis. We do see other non-prime consumer lenders failing this credit-challenged demographic by not offering holistic enough financial solutions.
Is this why Millennials are not bank loyalists? Studies show that banks seem to be losing ground with this crucial demographic/psychographic segment.
One in five Millennials (18%) said they switched from their primary bank in the past 12 months, compared with 10% of consumers aged 35-54 and only 3% of people 55 and older according to this US / Canadian study by Accenture two years ago. Are things getting worse?
We believe consumer expectations across all age categories are changing. Whether the end consumer changes their primary bank is the wrong gauge, instead if you look @ the customer experience & satisfaction (NPS), you will find that online lenders are continuously outperforming..
If these Millennials are bank agnostic, do they become MORE loyal if a lender provides superior customer experience & satisfaction? Or is this simply the new normal for the modern borrower.
Customer experience is now table stakes. We believe this is the ‘new normal’ for today’s borrower.
@alipourdad Thank you for your insights on innovative lending. Contact http://progressa.com/