Addressing the inequality gap

How Punk Money the bold and disruptive startup is cleaning up dirty industries and challenging big banks

Times are tough. We know this. The impact of the coronavirus pandemic has changed the world as we know it, and the financial implications of lockdown have led the UK into an ‘unprecedented’ recession.

It’s no surprise then that people struggling to make ends meet in the downturn have increasingly turned to rip-off payday lenders — some of whom charge annual interest rates in excess of 1300%, despite FCA regulations to attempt to control the cost of borrowing.

For many, the interest rate caps on payday lenders haven’t been able to prevent them sinking into a deeper spiral of debt.

Recent studies by the FCA have revealed that in recent years, UK residents have borrowed £2bn annually and repaid £4bn in short term loans alone.

“These eye-watering rates aren’t fair, they don’t reflect the actual risk” explains Nicholas Stevens, Punk Money Co-founder and CFO, “It’s about time for some rebellious disruption, and we can do better.”

Customer exploitation?

Some short term lenders, typically offering payday or doorstep loans, have long been accused of luring customers with a false sense of security. This is done by advertising loans of up to £1000 while doing little to educate on the affordability of loans. A report by the financial regulator, the FCA concluded: “There is a danger that some customers could be susceptible to suggestive marketing behaviour that could adversely impact their decision making around reborrowing.

“For those customers who are vulnerable or financially stretched, the impact of adverse influence could lead to harm.”

A sentiment echoed by Beth, a busy full-time single mother living in north Wales who we contacted after she’d asked for a Punk Money loan.

When her car broke down, she contacted a doorstep lender for help. He briefly scanned her bank statement and offered her £300, without consulting her properly about repayments.

“I wish I’d shopped around at first, rather than taking the first thing that was offered. I suppose I did it out of convenience.” She said.

The lender didn’t perform any kind of affordability check, and Beth ended up paying back nearly double the amount she’d borrowed. If she had known about Punk Money, she would ‘never have gone anywhere near the doorstep lender’.

We’re all in this together

This is where Punk Money is a gamechanger. We work with our customers, not against them. Our platform plugs into Open Banking for a personalised risk assessment and loan monitoring — if customers are about to have trouble meeting repayments, we’ll alert them in advance to arrange an affordable repayment solution.

With this modern connectivity Punk Money can offer our customers short-term loans that can be 94% cheaper than Payday loans and even 66% cheaper than Credit Cards for selected users.

As a community, we’re here to support each other. Our platform allows normal people to invest in each other and keep the profits that are normally swallowed up by the banks.

Jess, from south west London, works for a TV shopping channel and recently asked to become an investor on Punk Money. She’s looking to invest around £500 per month, she loves the idea of her money helping people directly and hopes for returns of up to 10%.

However, Jess wasn’t always in such a good financial position. She would have been ‘grateful’ for financial assistance in the past when she was studying.

“I really struggled financially throughout university. I was a single mother with two children and a part-time job, trying to juggle everything. I sometimes had to go without.” She recalled.

By cutting out the banks and keeping overheads low, Punk Money ensures that our lenders get impressive rates of return compared to other peer-to-peer platforms, while ensuring our borrowers aren’t forfeiting huge amounts of their income to cover repayments.

And with interest rates at just 0.1% — the lowest level ever recorded in the UK — savers with money in ISAs will be hard pushed to find a decent rate of return on their money. Many people are looking for alternative ways to accrue interest.

Jess, who has been investing in shares for around a decade, said: “This is a more lucrative and ethical way to get a decent return on my investment. I know the money is going to people who need it. Who knows where my money is being invested if I put it into a bank?

“Punk Money offers a really good rate and if you look at payday lenders, people are paying through the teeth to borrow small amounts of money. It’s ridiculous.” Having had a bad credit rating in the past, she despises the way that people going through financial hardship are exploited.

Coming Full Circle

Founder of Punk Money, Ewan Dickie, explains it like this “Punk Money supports both sides of the system. You may need to borrow today, but perhaps one day you’ll be able to repay the favour and help someone else. That’s what our platform is designed to do.”

This sentiment is shared by Simon from Watford who recently asked to borrow money after a house move left him with no savings. Having worked all his life, he was usually in control of his finances, but when he and his family moved house, there were more unexpected costs than he could have imagined.

“We paid the deposit and first month’s rent and we had some money left over for furnishings, but we had to buy new kitchen appliances as the old ones wouldn’t fit in the new place. I’ve never borrowed short term money before, because I’ve never needed to, and I didn’t want to go to a payday lender.

“I like the idea of helping people out, and once we’ve settled into our new home, I’d love to be in a position where I can lend to others if they need a little help.”

This is what Punk Money is all about — empowering people with an ethical finance option which allows the ‘lender’ to come full circle and one day become a ‘borrower’. Like all solid communities, we support each other when times are tough and then celebrate together when life is on the up.

We love providing a platform where real people, with real stories can support one another to create positive and lasting change — both in their own lives and in the lives of others.

Community is at the core of everything Punk Money stands for and hearing how Beth, Simon and Jess have benefited from the platform motivates us to make a difference for millions more.

Keen to learn more about financial freedom for the future? Join the new-wave of punks paving the way today. Together we are so much better.