Using fintech with a human touch to improve credit scores in the US

Self Lender balances tech and human interactions to help Americans build their financial health

Fintech startups are often said to “disrupt” the financial services sector. Usually this is not because they have an entirely new financial product to offer, but instead, they have developed tech-assisted improvements on existing services. Even the most digitally-driven fintechs tend to retain some elements of human touch in their offerings, however, as consumers appreciate some familiarity and security as they begin to use more and more technology in their financial lives.

In our recent paper, “The Tech Touch Balance: How the Best Fintech Startups Integrate Digital and Human Interaction to Accelerate Financial Inclusion,” we showcase several fintech startups in the Accion Venture Lab portfolio that are finding an optimal balance between tech and human interaction, making their offerings accessible, affordable, and attractive to their target customers. While most of the companies profiled are located in developing countries, one, Self Lender, is in the United States.

Some 45 million Americans have “thin-file” credit, meaning they don’t have much credit history because they are newer to using credit or haven’t used it much. Another 50 million have damaged credit because of debts or other personal circumstances. Credit builder loans are an existing option to help people build or repair their credit scores, but have not been widely available or used. In a credit builder loan, a financial institution loans a client a sum of money, and the client’s repayment installments are deposited in a savings account. Over the term of the loan, if the client makes payments on time, this fact is reported to credit bureaus, boosting the client’s credit scores. When the loan is repaid, the client may access the money in the savings account. Self Lender, a fintech startup based in Austin, Texas, offers an online version of the credit builder loan, making it accessible across the country.

Americans are quite comfortable using computers, and many even have experience with online banking, so an online-only application makes sense for Self Lender. There are, however, call and chat functions applicants can use if they run into questions during the process.

Once the loan is approved, the relationship between Self Lender and the borrower is also highly automated: payments are made online, reminders are sent via email, account status can be tracked on the website. But Self Lender maintains a human feel to the relationship, such as by using names of real employees in the sender field of email messages, even though they are automated. Posts on social media and the website blog also allow Self Lender to share information about their services in a more approachable way.

For more examples of how fintech startups balance tech and touch as they develop their offerings, and general advice on these issues, read the full paper here.

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