I find this discussion very encouraging and engaging.
On one hand, Lending products roughly tie to certain purposes Overdraft for short-term, Credit card for medium-term bulk purchases or just a payment vehicle and Loans for longer-term with structured payment.However not having transparent products and features means lending products may not serve the purpose they are intended for.
Overdrafts, as Tom mentions, is a short term lending product. If you have a direct-debit to pay and you are short of money you can dip into an overdraft to pay the same. However, if you buy a laptop and remain in overdraft for 3-4 months then it not the right product. If you are in overdraft all the time it is expensive and is not responsible lending.
In Monzo, we are want to think about Lending as part of building the financial control center for our customers.
Question: How do we do this?
If the answer is ready-made products like overdrafts and loans then so be it. However, we think we can go one step forward and design lending features that solve problems from the “first principles”. The principle being a customer should be in control of their finances and how can we make the cost of borrowing transparent. A customer should be able to look at their current ( and future ) borrowing needs and the associated costs and make decisions about the product they would want to use. It could be for price or convenience. The “Spread the Cost” will attempt to do this.
We will launch products to support this and as with all Monzo products, we need your support ( encouragement and debate ) to shape it.
Again, thank you for all the feedback