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NAB launches its answer to the payday loan problem


Speckle will provide loans of up to $2,000 at around half the cost of payday loan competitors.

NAB has today announced the launch of a new loan service called Speckle, designed to provide a low-cost alternative to those in need of a payday loan. The bank has worked with not-for-profit Good Shepherd Microfinance since 2003, providing no- and low-interest loans for essential items to financially vulnerable people, and Speckle will "extend this partnership".

In the announcement, CEO of NAB Andrew Thorburn and CEO of Good Shepherd Microfinance Adam Mooney noted that the current program has helped "more than 500,000 people on low incomes", but that there is a growing gap in the market that requires assistance.

Speckle has borrowed many of the trademarks payday lenders have used to establish themselves, such as fast turnaround times and easy online applications. The Speckle website notes that most loans are approved within two hours and funds are usually transferred within two business days (a slight extension on the typical one business day offered by most payday lenders).

However, the costs are where Speckle stands out.

The Australian Securities and Investments Commission (ASIC) has heavily regulated the small amount credit contract (SACC) market; lenders offering loans up to $2,000 cannot charge more than a 20% establishment fee and a 4% monthly fee. While there is no requirement for them to charge these fees exactly, most do.

Speckle has cut the fees in half. Borrowers can apply for between $200 and $2,000 and pay an establishment fee of 10% and a monthly fee of 2%. Dishonour fees of $5 apply and a daily fee of $1 applies for defaults over 30 days. Repayment terms can be between 3 and 12 months.

To be eligible for a loan, borrowers must be 18 or over, earn over $30,000 p.a. (not inclusive of Centrelink) and no more than 50% of their income should come from Centrelink. They also can't have had more than two or more small loans in the previous 90 days.

Speckle, like other payday lenders, will use technology to offer a quick and online approval process to cover "necessary things like car repairs, children's needs and other household expenses". If required, the service can also provide customers with access to financial counselling and other social services.

It is a move away from the Good Shepherd Microfinance store model, even though it did prove to be a successful one. 2017 was the busiest year on record for the non-profit with more than 27,300 loans provided to financially vulnerable people.

However, Thorburn and Mooney note that there is still a way to go.

"We are making progress, but we have so much more to do to reach our goal. And the entire banking sector has a role to play in ensuring that no one gets left behind."

"Together, we are backing borrowers to move ahead – a vote of confidence in their future."

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