Last week another victim of the high cost loan industry was QuickQuid entered administration, following on from our help centers such as Wonga and The Money Shop last year.
But with more than 5 million people using payday loans each year according to the FCA, the demise of another traditional lender will leave a large number of people looking for short-term loans.
The danger is that this group of borrowers, often with low credit ratings and seen as vulnerable, could give rise to loan sharks and other forms of unregulated borrowing.
However, there are a number of FinTech companies looking to break this mold and move customers away from addiction to expensive payday products.
WageStream recently raised £ 40million in funding and their product allows staff to extract money from their payslip based on the number of days they have earned. Where workers have a habit of waiting until payday for their next income explosion, this frees up all the money earned so far.
This is designed to keep people from waiting for their next paycheck and help them use their own hard-earned money to pay immediate expenses and bills.
Neyber is another promising fintech that tackles the wage problem directly through employers. Businesses that register with Neyber can offer small loans through the business and also provide sound advice and education on finance, budgeting, and investing.
Employees get hands-on experience on how to manage their money and if they need to borrow, they can do it in an organized and manageable way.
My financial broker has developed a loan matching tool, helping people find short term loans based on their eligibility. Customers are offered the best low rate and the company willing to offer them a loan, avoiding the need to go to multiple companies and having trouble finding a potential lender.
Koyo raised more than £ 3million in October to help people with no credit score access finance – when they have typically been turned down. The product uses credit building and other forms of eligibility to help clients get the best loan, especially those who were previously left behind.