Revolutionizing Banking for Retirees: Tailored Loans and Market Transformation.

 

Problem. Lending to Retirees.

 

The lending market for retirees in Russia faced a significant problem. There was a lack of suitable and straightforward financial products tailored to the unique needs and circumstances of retirees. Despite the rapid development of advanced banking products like contactless payments and instant loans at store checkouts, there was a notable absence of loan products designed to cater to the financial needs of retirees.

 

Russia had over 39 million pensioners, making up more than 27% of the total population. These retirees, who received guaranteed monthly pensions from the state, often represented the sole source of regular cash income for multiple families, including children living with their retired parents. Many regions, particularly those with low-income levels and high unemployment, relied heavily on pension incomes and subsistence farming.

 

However, despite this significant demographic, there were no specialized loan products available to pensioners. The conventional banking system offered only two options for pensioners seeking loans: mortgage loans secured by their homes or loans with guarantors possessing good credit histories and stable incomes.

 

This presented a dilemma for pensioners. They couldn't risk their homes as collateral for loans, as these homes often housed their children and grandchildren. Guarantors were not always available or suitable due to the economic conditions of the region.

 

The situation called for a new solution.

 

Action. Empowered Retirees Through Tailored Loans.

 

To address this pressing issue, a loan product designed exclusively for retirees was developed, eliminating the need for collateral and guarantors. Careful consideration and innovative thinking were employed to mitigate potential risks associated with this unique customer segment.

 

Key Actions Taken:

 

• Conducted Thorough Market Analysis: Analyzed the cost of living in regions where the product was to be offered and tailored the loan terms accordingly.

 

• Analyzed Pensions: Examined the intricacies of pension payments, considering their value and regional variations.

 

• Mitigated Risks: Collaborated with leading insurers to create an integrated insurance product within the lending offering. In the event of the borrower's passing, the responsibility for repaying the outstanding loan shifted to the insurance company, relieving the burden on the borrower's heirs.

 

• Expanded Branch Network: Increased the branch network to ensure convenient access for potential clients who preferred face-to-face interactions.

 

• Built a Dedicated Team: Assembled a specialized team to work on this groundbreaking product.

 

• Convinced Investors: Persuaded investors of the product's viability and the adequacy of the risk strategy.

 

• Set Up Operations: Organized and configured operations, conducted personnel training, implemented software, and managed various other tasks, all within a tight six-month timeframe.

 

Result. Transforming Banking for Retirees.

 

The results of this project have been transformative, not only for retirees but also for the banking sector as a whole:

 

• Modernized Banking: Succeeded in creating a modernized banking product tailored to the unique needs of retirees, filling a significant gap in the market.

• Mass Adoption: Following the product's launch, it quickly gained adoption in numerous banks across country.

• Rapid Growth: The loans issued to individuals with maturities exceeding three years at our bank grew exponentially.

• Increased Customer Base: Thanks to this product, bank saw a sharp rise in the number of retirees receiving their pensions through bank, contributing to a substantial increase in total customer base.

• Financial Impact: The product significantly boosted bank's net interest income, reaching 10%.

 

In summary, this project has not only empowered retirees with access to financial resources but has also positioned bank as a leader in addressing the unique financial needs of this segment, contributing to substantial growth and impact in the banking industry.