Yesterday, my CFSI colleague, David Newville, was trying to persuade me that the payday industry should do what Barclay’s new credit card, Barclaycard Ring, intends to do: offer its customers total transparency into the costs, profits and losses of its business and the opportunity to build the product themselves.  Crowd sourced lending!

You can read about the Barclaycard here, here and here.  Basically, they intend to share the profits with the customers, then let them decide what features to add and how to price the product.  If the majority of users are want bigger profit sharing, the prices will be high.  If they want lower costs, they’ll “earn” less.  It’s a powerful idea.

In the realm of the underbanked, where credit issues are so controversial and all parties so ossified in their positions there is practically no real conversation – or change to the status quo.  The “predatory” lenders are incredibly defensive at any suggestion they could do more for the welfare of their customers: “we serve a big need” is their (true) refrain.  The consumer “advocates” are so blind with anger at the practices of the capitalists that they ignore the realities and consequences of the people they care so much about.  As a result, nothing much happens: a rate cap pops up here; an offshore lender pops up there. Repeat.

Could a way to unwind this be to give the advocates the information they need to price and structure a product that reaches fewer with lower cost, and force THEM to find a balance?  The trouble otherwise, is that nothing is ever enough.

With credit democratizer Chris Larsen and responsible lending pioneer James Gutierrez both leaving their posts this week, perhaps they should start a Barclaycard Ring for the underbanked: crowd sourced short-term credit targeting the emerging consumer.  Core wants to fund it!