Meet Our Winter 2019 SDL365 Achiever: Raquel Baugh!

By Janie O'Brien / Posted: Jan 12, 2020 / 0 Comments / Posted in Student's Corner

Winter 2019 SDL365 Scholarship Achiever Raquel Baugh

Finalist’s Profile

Name: Raquel Baugh

University: Western Governors University

Major: Marketing Management


Congratulations to Raquel, the winner of our Winter 2019 SDL365 Achievers Scholarship! Her SDL365 Achievers Scholarship Contest essay provided an excellent frame of reference on some critical areas in which organizations can work towards customer-centric communications to gain trust. We are honored to offer her a $500 prize in our contest. Congrats, Raquel!

Practical Ways to Build Trust Around Short-Term Lending

The global financial crisis of 2008 may be an all too distant memory for some people. Still, for me, after being laid off three times, I struggle to understand how the trust in financial services could ever be restored in full after such a catastrophe. Though, I was fortunate enough to keep my home. I learned to live within my financial means, heed excellent financial advice shared with me by professionals, and did not refinance my house to the point where I could not afford the payments. My short-term debt needs, such as payday loans or online installment loans, were kept to a minimum and always paid off on time.

However, there were other people and families whose financial situations and credit ratings worsened. By 2009, foreclosure numbers rose to record highs, and bankruptcies soared to unprecedented numbers for those in need of relief from their overwhelming long and short-term financial burdens. The financial crisis was one for the history books. It provided valuable lessons for financial institutions and consumers alike. Could this have been avoided? Yes! In my opinion, building trust in financial services with a consumer, specifically for short-term lending, is about providing information, helping the consumer understand product and cost transparency, and quality human interaction.

A short-term loan is a type of loan provided to a person or business looking for an economic boost. Furthermore, lines of credit, payday loans, and online installment loans are often popular forms of short-term loans. A financial institution may promote the short-term loan to a consumer by focusing on a consumer or business’ ability to acquire the loan with less than optimal credit scores. Yet, while the requirements of a short-term loan may be easier to meet, people may not fully understand the terms upon signing up for one. So, the burden of persuasion must also be satisfied with the responsibility of clear information from the short-term lender to the recipient.

Providing first-class financial advice is not inherent to every financial institution. One could reference the downfall of WellsFargo in the public eye back in 2016 as a relevant example. They shamefully fired 5,300 workers for creating millions of fake accounts and lost the trust of thousands in the industry (Egan, 2018). Moreover, depending on the lender, when it comes to short-term loans, a lack of full disclosure on this “speedy funding” could result in egregiously high-interest rates and hidden fees for the person or business receiving the loan. So, for example, if a person was in urgent need of a short-term loan and he or she did not read the fine print within his or her terms and conditions, it could lead to painful financial consequences. All of this leads to consumer distrust and skepticism.

Because of these news stories, online review websites, and even word-of-mouth experiences and stories shared around a dinner table during the holidays, people are often reluctant to engage with a financial institution they are not familiar with for something like a payday loan. While the need may be there for temporary financial relief, the trust must be built by the financial institution through consumer-centric, open, and honest service.

The good news is, there are a variety of ways financial institutions can build trust with quality consumer-centric communications.

Some great examples for businesses looking to provide short-term loans to consumers include providing upfront information on the products and services offered on their website; and adding a frequently asked questions section to help people who are not sure if the product they’re interested in is right for them. Next, formally disclosing all the exact interest rates and fees in large text on any agreements the person or business may sign is an essential step for a financial institution to take. And, finally, providing several ways for people with questions to contact them. Using social media websites like Twitter and Facebook to provide consumers with helpful information and remaining in touch through email methods can also be advantageous for building trust.

In conclusion, real people answering questions and providing guidance to consumers who are not savvy in the various types of available short-term lending products is a critical component of building trust with consumers, like me, around short-term lending. People who are desperate for help with a payday loan may also fare exceptionally well with sound financial advice and continued communications from a business that cares about their economic well-being. Building trust is ultimately about building a relationship over time, and that includes not just providing a person or company with a quick cash infusion, but being a lifesaver in other ways to help guide people onto the right path of eliminating cycles of debt.

Egan, Matt. (September 7, 2018). CNN Business. The Two-Year Wells Fargo horror story just won’t end
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