PEER-TO-PEER lending software provider Madiston has launched two new products, to encourage the growth of “ethical lending” in the personal loans space.
One of the products, salary deducted loans, enables employees to authorise their employers to pay their loan repayments directly from their salary, while gaining a reduction in the interest rate charged on their loan.
The other product, intra-month loans, works similarly to invoice finance for businesses but for employed individuals. People who are paid monthly will be able to access their money during the month to boost their cash flow, releasing financial pressure before payday.
Madiston cited research by The Money and Mental Health Policy Institute, which found one in four UK workers experience financial insecurity, contributing to the loss of 17.5 million working hours as employees take time off due to financial stress.
Barbados-based P2P lender CariLend is already using Madiston’s salary deducted loans software to provide loans to employees of local businesses and the Government of Barbados.
“We run all our online lending on Madiston’s software including the salary deducted loans,” said Mark Young, chief executive of CariLend.
“Individual employees can approach their employer to request payment is made from their salary, saving them interest on their loan and/or gaining access to loans they would not otherwise be able to be granted due to their credit scores.
“Given the high prevalence of unbanked or underbanked consumers in our markets this opens up access to credit at much more affordable rates than are available otherwise.”
Tim Simon, chief executive of Madiston, said that he envisages the new products being popular with UK P2P lenders.
“It is our aim to offer software that enables socially responsible credit services that will be considerably cheaper than any previous bank offerings and will genuinely help people,” he added.
“Highly automated processes mean lower costs for the financial institution which mean they can pass savings on to their customers and still achieve profitability.”