I believe that everyone has a role to play in making our financial systems more inclusive. Everyone - including banks, credit unions, policy makers, regulators, and for-profit lenders have a role. Even nonprofits. Traditionally, we have not considered nonprofits playing a significant role in the financial marketplace. In fact, most nonprofits relegate any subject on financial education and such to their local bank branch manager. Or they partner with a credit union to make referrals. So, you see, nonprfits are the newbys in this space. But to your question about whether for-profits could do good in the micro-lending space, I believe that they can - the question for me is whether they have a bigger vision beyond their loan product. If they only see the costs associated with providing a micro-loan then they will price their loans accordingly. And as we'd seen in many places, these prices will be very, very high. But if they have a cost benefit analysis that is broader, they may be able to see the ripple effects from the micro loan and identify the other players in the filed who will benefit from their work. And these ripple effects become a way to join forces and share the benefits - and costs.
There's a lot to say about scale - this has been our biggest challenge to date. One argument is that lending circles in their traditional form - that is as informal ROSCAs - are at scale already if you consider that millions of people are engage in such practice the world over. The issue here is that the activity is informal and hard to prove, track, and report - but it's at scale nonetheless. What is not at scale is our ability to formalize such activity so that folks could get the benefit of rule of law, of security, of peace of mind knowing that their financial practices, rooted in community, are being recognized. And of course, technology, policy and resources are all key to building up our capacity to formalize the activity. As for our metrics for success, we have many data points that we closely track - but the key one if we were able to improve people's financial lives - were they able to lower their high cost debt, were they able to increase savings, were they able to increase their income, were they able to access middle-class financial services.
Hello Alicia - to your question - the loans appear on credit reports as installments loans, with a clear start and end date. Lines of credit would be more like credit cards and such. And as for how folks graduate, with improved credit, empowered with better information, and a spring in their step, they walk into bank branches and get loans to buy cars, invest in their business, and some even get mortgages. In a course of 12 months, clients increase the number of tradelines on their credit reports by 3. They graduate by doing all that things that we all in the financial marketplace. It's that simple.