An interesting consumer credit card offering: https://www.petalcard.com The most unique thing about it is the schedule of cashback, which gets more lucrative the longer you have the card (to a cap), contingent on on-time payments.
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There exist many providers who specialize in the needs of EE. You look at their pricing, policies, etc, and consider them odious. You’re going to do right by your customers, darn it, and make enough money to keep the lights on by durably improving lives.
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Suppose hypothetically your company successfully executed on this mission for 20% of your customer base, and the margins from their accounts subsidize your services to everyone else. Bad news: by successfully working with you, you’ve flagged that 20% as VDC.
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“Flagged? Flagged how?” Oh remember that part where you’d underwrite people without material credit history? You know what they have after using your card for a year? Credit history.
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And thus the (extremely sophisticated and well resources) firms serving VDC will get in touch with them, plausibly using information (addresses, etc) that you reported to the credit bureaus, and say “Why not switch to our product? It is better for you in every way.”
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And here is a hard realization: the big bank marketing department telling your best customers this? They are telling your customers God’s honest truth. They factually are offering better terms than you are, plausibly across the board.
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There was a time in which financial institutions had relatively undifferentiated offerings and so the covert subsidy by your VDC of your EE was laundered through the bank. You can still find this in some markets. (Japan is an interesting example.)
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And thus folks building products for underserved folks find that they generally need to make the economics work on the population which *does not* transition out from being underserved. And then the mission... sounds a lot less fun.
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End of conversation
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