While the debate over the payday loan industry in the US continues, a company in the UK has invented a revolutionary model that is changing the industry as we know it today. I spoke to Ofer Valencio Akerman, the man behind this new concept.
Our aim was to find out if one of the most criticized industries can ever figure out how to treat customers fairly. During our conversation with Mr. Akerman, I also discovered insights into many of the issues that stigmatize this niche.
Before talking about the new concept, let me ask you what you think of the payday loan industry in the US?
In my eyes, the payday loan industries in the UK and the US have developed a bad name for the exact same reason. In my opinion, there are two essential elements that we need to understand in order to make sense of the chaos surrounding payday loans. The first element is the marketplace and the second one is human nature.
1. The Marketplace - Free market dynamics suggests that if a product is bad, people will not buy it. In addition, according to the principle of supply and demand, if there is a great demand, there is always a supply. If both are true, how can you explain the growing appetite for payday loans around the world and the fact that despite the negative press, it is still a product in high demand? It is very easy to set payday lenders on fire and paint them as the bad guys, but at the same time, ignoring the huge demand for this product is like burying our heads in the sand.
2. Human Nature - When facing a decision between making money fast or doing the right thing and working harder to earn money slower, how many people would actually take the slower path to money? The payday loan industry puts payday loan companies in this position on a daily basis - with a lot of money on offer! Understandably, this makes it tempting to compromise integrity, good values, and honesty.
Do you think that regulation can help this phenomenon come to a stop?
Strong government supervision on free markets seems to have significantly minimized unfair conduct in the UK and US alike. At the same time, I am yet to be convinced that this can help to change people's nature. I believe that even with most comprehensive government regulations; immoral people will always find ways to take advantage of others.
In the UK, the Financial Conduct Authority (FCA) has imposed very strict principles of conduct that have completely changed the UK payday loans market. I believe they have set the gold-standard for other markets to follow. The real change will unfold when more businesses, besides us, genuinely adopt these principles as a matter of culture and not to try and avoid fines. Moreover, these principles should be considered by lenders as a starting point and not as a glass ceiling
How have you built your model to change the payday loan industry?
The Cashfloat model will change the industry because it is based on fundamentally good morals and the most advanced artificial intelligence technology, designed to help and protect people when taking payday loans online.
I believe that the combination of advanced technology with fundamentally good values is the right way to drive the change and develop a legitimate payday loan business. Our model is vivid proof that payday loan companies can be profitable and moral at the same time. We integrated all the FCA principles regarding treating customers fairly, capping interest rates, fair marketing, courteous collection and powerful affordability assessments from day one of our operation.
How has your experience in cyber crime helped you create this business model?
Although I have managed to create and implement this model only recently, my inspiration began to grow a long time ago. As a cyber crime investigator, I saw how immoral lenders are making millions in profits at the expense of defenseless people. I saw them, and I investigated their ways. With the years, I formulated a list of all their misleading tactics. The new model is designed to protect our customers when applying for loans online.
To name some, we have eliminated the use of rollovers and put in place advanced algorithms to prevent addiction to this type of credit. We have also developed a multidimensional affordability assessment to ensure that people can pay their loan without getting deeper into debt. My aim as the Chief strategist of Cashfloat has always been to ensure that none of the nasty habits I discovered as an investigator infiltrate our business model.
Can you share some more details about the Financial Conduct Authority (FCA) ready SEO strategy you are using for client acquisition?
As a moral lender, we wanted to provide an affordable and transparent product. At the same time, however, we needed to drastically reduce our cost of client acquisition to allow us to treat the customer fairly and still make profits as a business. The online loan industry is indeed one of the most competitive and aggressive markets. Before the FCA, people used misleading tactics to generate click through, and in many cases, traded customers' data unfairly.
As a solution, we have developed a compliant, yet powerful, FCA Ready SEO strategy that is based on advanced content publishing principles, scaled downlink building and unique engagement amplifiers. With this strategy, our business is running on 100% organic traffic. We don't need to trade people's data or buy expensive leads from brokers or affiliate networks. We work with our clients directly from the time of application until they clear their loan. Working this way allows us to provide clients with complete protection and assistance.
Today, we have already helped over 8000 people in the UK, and our reviews are fantastic. Our company is living proof that a business can make a profit while still being moral and helpful.