Putting A Whole New Spin On Community Banking, One Micro-Loan At A Time

Benzinga's Fintech Focus Podcast features conversations with the biggest names in fintech. Subscribe to the Fintech Focus newsletter to get a roundup of industry news delivered to your inbox weekly, and check out upcoming programming at Benzinga events.

The Fintech Focus podcast takes a look at how a London-based micro-lending company is building a physical presence within its community and breaking down socioeconomic barriers in the lending world.

In this episode we chat with Oakam CEO Frederic Nze, who’s made it his mission to disrupt micro-lending by making borrowing more affordable for underserved members of London’s working-class communities.

The fintech startup has reached an estimated 12 million citizens within the United Kingdom’s poor, migrant and working-class communities. Oamkam’s done this by not only offering a better way to bank, but by tapping into the heart and soul of the communities in question through financial education workshops and even jobs at the different branches around London.

Interview Highlights

Anyone can be suspicious of financial services, especially when what’s being offered sounds too good to be true. How do folks respond when they learn about Oakam and its product suite?

So, first we had to overcome that feeling of, “Are you real and serious?” So, what we did is we actually used a physical network. Our strategy when we tracked them is we decide to pick one area of London where you have a lot of deprived areas—we picked up East London—and we opened 10 stores within five miles of each other to give the impression to these customers that we were national.

So, if you were in East London, which has a very high density, we put our brand everywhere. You couldn't take a bath or walk around without seeing us, and the idea was to send a message to people that we're here to stay.

Then we did the second step. We hired people from the communities we were serving. So, instead of saying, "We're Fintech and you're in East London and you're poor and a migrant, or poor and single, we're going to hire all these millennials that are coming from another area of London and they're going to serve you," We said, "We need to go to places where there's a high unemployment. Same way as we're going to take a chance lending to you, we're also going to take a chance with trying to get employees from your community." It was a bet, because we needed to do much more in training, but the result of that is we established trust very quickly because our employees had been through the same story our customers were going through.

What gave you the idea to start the retail presence?

There were two challenges. One was the one we picked up around brand and trust, and so with the focus group we had with the first customers, a lot of the complaints that they were raising were around having to deal with banks or financial services through contact centers where the staff was very remote…We felt we needed to start something where the interface was relatively rich, that would enable us to really explain, educate and develop these relationships.

The second problem we were trying to solve was for a lot of these consumers there was nothing in it for the bureau. There's no FICO score. I know in the United States, you have certain communities like Latino, and 40-odd percent of them cannot get a FICO score. There isn’t rich-enough data on Experian, TransUnion, and Equifax. So this is the core of what we're targeting. We have customers who have fragmented files, thin files or files that are mixed because you're sharing accommodation with other things, so you get automatically declined. We felt we needed to have an interface that would be very rich at the end of the day so we could capture.
Listen to the full interview with Oakam.