A Spoonful Of Sugar: New Evidence Demonstrates Power Of Empathy In Lending

WELLINGTON, 6 June, 2023 – A new ImpactLab report has forecast the sweet results that a unique New Zealand social enterprise could be set to reproduce through their human-centred approach to debt and financial education.

The first of its kind worldwide, Money Sweetspot marry together a financial ‘reset’ for customers by both consolidating debt at lower interest rates and connecting them to financial education.

According to ImpactLab analysis, Money Sweetspot are estimated to create over $6M of social value across Aotearoa, with a social return of $7 for every $1 invested in its work. The programme is expected to significantly support over 3,000 New Zealanders over the next year.

“These metrics demonstrate how an empathetic approach to debt consolidation and financial education can make a lasting impact on peoples’ lives,” ImpactLab CEO Maria English says.

“ImpactLab measured multiple outcomes within Money Sweetspot’s programme that look to prioritise customer wellbeing, with it found to improve mental health while simultaneously reducing risky behaviour, emergency benefits and debt.”

With a focus on helping people to navigate the financial game better, co-founder and CEO Sasha Lockley is dedicated to ensuring that every Kiwi repaying debt is met with support and rewards, rather than unfair interest rates and the threat of harsh penalties.

“Standard industry practice can see many businesses keeping their customers in debt, which in our eyes, is plain stupid,” Lockley says.

“Our goal is to lose our customers as quickly as possible, so that they can move on with their lives.”

A no-nonsense, mission-driven organisation, debt repayments through Money Sweetspot tend to be significantly lower than those required by other lenders, with no monthly account fees and an average interest rate of 13.5 per cent, rather than 30-50 per cent.

“Currently, New Zealand operates under a financial system that sometimes judges people for what life inherently is: unpredictable,” Lockley says.

“As a result, the underbanked and underserved pay more for their debt, particularly in the current environment.”

Lockley is also a passionate advocate for forming adult relationships with customers, rather than a parent-child one that punishes or patronises the customer.

“We are firm believers of the fact that people are good, but bad things can happen to any of us. It is madness to treat customers as if they are just ‘bad with money’, and not as though they are an everyday person simply trying to navigate life.”

“Unfortunately, by primarily using tools like credit scores financial organisations are can struggle to help people through common life events such as divorce, redundancy, relocation, or illness; of which often see people juggling and struggling their finances and spiralling into distress. Credit scores are only one part of the picture.”

Alternatively, ImpactLab measured multiple outcomes within Money Sweetspot’s programme that look to prioritise customer wellbeing, with it found to improve mental health while simultaneously reducing risky behaviour, emergency benefits and debt.

A case that illustrates the impacts of Money Sweetspot’s approach involves a customer struggling to stay on top of her finances following the recent death of her husband.

Trying her best to manage her grief on top of the multiple debts that the couple had accumulated over the years, she took on another two jobs in an attempt to stay afloat. However, this was both a challenging and unsustainable practice to uphold.

Upon receiving approval from Money Sweetspot for a financial reset consolidation loan, she felt as though she could finally breathe again. Reducing her interest and saving $237 per month on her debt repayments allowed her to protect her livelihood and start to rebuild her life.

For Lockley, it is these testimonies from customers that best demonstrate why we need to compel change in a financial system that continues to fail people nationwide.

“People are not data points, and they deserve a financial lending system that better recognises this distinction. We are honoured to assist in helping customers to repay their debt, but that is only one, small part of their story.”

© Scoop Media