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 Who Is the Vulnerable Borrower?

Six Ways to Reduce Lender Risk: How we can apply behavioral science to say yes more often  




One word makes a big difference. An approval can mean keys to a home, the capacity to start a business, an onramp to wealth. A denial can mean it’s back to the drawing board for how to make rent or get groceries. 

What if we’re saying no when we could be saying yes? What if, as an industry, we’re overweighting lender risk and underweighting applicant capacity? 

At Sawa we believe that more people are creditworthy than they get credit for — and that we can ameliorate this problem by making more sophisticated assessments of creditworthiness, using behavioral science to encourage payback and engagement with creditors, and tapping into the power of community. Here’s how: 

Who are the unbanked?

In 5.9 million U.S. households, no one has a bank. Not a checking account. Not a savings account. They don’t “go to the bank.” These are the unbanked. Who are they and how do they operate financially in 2023? Let’s take a closer look. 

Who are the unbanked? 

The unbanked are not a static group. As Lisa Servon writes in The Unbanking of America: How the New Middle Class Survives, “Many people — not just the poor — move in and out of banks.”¹ Certainly households that are white, married, able bodied, higher income, and more educated are less likely to be unbanked — but this doesn’t in and of itself tell me much about the banked or the unbanked. It tells me much more about the banking industry.

Our Response to Predatory Credit

Americans currently spend $30 billion annually on fees and interest to borrow small amounts of money from — not the banks — but alternative lenders like pawn shops, loan sharks, payday lenders, auto title loan services, buy-now-pay-later, and rent-to-own, according to The Pew Charitable Trusts. They use this credit to deal with income volatility, weather financial shocks, and simply pay their bills. 

The Behavioral Science Theory Behind Sawa’s Community Saving Platform

How the technology used to make people buy things they don’t need can help them transform their financial future

I have a big question: What are we worried about with artificial intelligence? Why do only 9% of Americans think AI will do more good than harm according to a Monmouth University survey, and only 15% of people feel more excited than concerned according to the Pew Research Center? We worry because while AI can enable us to do amazing things, it can also be used to create tremendous harm. AI feels like magic — exciting magic and scary magic, but magic nonetheless — because we are working with forces we don’t truly control or understand. The same is true of behavioral science.