We’ve published a paper to share insights and early learnings from this initiative which looks at regulatory action and wider success factors, as well as bank engagement and how the market has developed in the US.

This banking-led initiative has seen large US banks, credit unions and regulators work together to create the conditions for lenders to responsibly offer sub $1,000 loans to millions of people who were previously financially excluded, or who relied on expensive payday lending.

Benefits for both consumers and lenders

• Since 2020, the small dollar loan programme has unlocked over $800m of loans issued to more than 2 million borrowers[i]
  Small sums, on average $500, are being repaid in three or four instalments with overall repayment rates within acceptable tolerance levels
  Customers are benefiting from fairer alternatives to much higher cost lending and greater access to short term credit to help build their financial resilience
  And lenders are tapping into a significant market demand and viably serving a wider range of consumers in the communities they serve
   

You can read more below:

[i] Loans issued according to limited publicly available data (therefore likely to be an underestimated of the true amounts), including:
American Banker, October 2024, Banks fight payday lenders with cheaper small-dollar loans: ‘Since launching its product in 2020, Bank of America has extended 1.6 million Balance Assist loans for more than $700 million, according to a spokesperson.’
Wells Fargo, 2023, Annual Report: ‘In the fourth quarter of 2022, we launched Flex Loan (…) Customer response continues to exceed our expectations, and we originated over 350,000 loans last year.’
Banking Dive, June 2021, Ally, Huntington launch efforts to curb overdraft fees: ‘We launched it with $25 million as an objective, and we’re rapidly closing into that.’