Dependence on microloans: the share of repeat clients of microfinance organizations has grown at a record level

Experts named five reasons for the popularity of payday loans even in the face of rising incomes

In microfinance organizations (MFOs), the share of repeat clients reached 83.4%, which was the highest figure over the past three years. This is evidenced by data from the Webbankir platform. The MFOs themselves are very pleased with such indicators, since this type of lending business becomes profitable and pays off precisely when the borrower becomes a regular client. Experts told MK about why Russians continue to turn to microfinance organizations despite income growth, and whether this trend will continue in the future.

Last year, the Russian economy grew by 3.6%, and real disposable income of the population by 5.4%, Rosstat reported. Both indicators exceeded government forecasts, but this did not reduce the number of clients in MFOs. Let us recall that based on the results of three quarters of last year (there are no more recent data yet), the total volume of microloans from Russians increased by 18.2% compared to the same period in 2022 and reached 348.1 billion rubles. And the total number of clients over the same period in Russia approached 20 million. In addition, it now turns out that the number of repeat clients of MFOs over the past year broke a three-year record: their share reached 83.4%.

Economists have identified five reasons for the popularity of microloans among Russians, even in the face of growing incomes. Thus, according to Associate Professor of the Department of Finance for Sustainable Development of the Russian Economic University. Plekhanov Ayaz Aliyeva, firstly, the number of microfinance organizations on the market is decreasing, which affects the choice of citizens. Secondly, it is also necessary to take into account consumer psychology: it is easier for people to return to the same MFO where they are already known.

The third reason is the high development of digital services among microfinance organizations. “One of the reasons for the popularity of microloans among certain audiences of borrowers is the high technology level of this sector,” says Alexey Volkov, Marketing Director of the National Bureau of Credit Histories (NBKI). “We are talking, first of all, about the possibility of issuing loans online, which makes them easier to obtain and service.” We should not forget that a significant part of MFO clients are citizens with not the highest personal credit rating, whom banks often refuse to receive loans, the expert notes. So the specific client profile is the fourth reason for the popularity of MFOs among Russians.

But not all analysts agree here. It is believed that clients apply for microloans simply because they are easier to obtain than a bank loan. “It cannot be said that these are mostly dysfunctional clients,” emphasizes financial expert at the consulting company Binkor Andrei Pukhnarevich. — If you need amounts up to 20 thousand rubles, then it is easier to contact an MFO than to submit an application through a bank. And you can get a loan with a bad credit rating.”

The fifth reason for the popularity of MFOs among Russians is marketing campaigns and their own work to maintain the loyalty of their clients. Some financial institutions of this type deliberately offer lower interest rates for regular customers. It is for this reason that citizens mainly turn to those companies where they previously obtained loans “A repeat client is the best client. This can be called the principle of MFOs,” Mark Goikhman, an analyst at the Capital Skills Financial Academy, continues the conversation. — Microfinancers are “between two fires” in terms of risks. On the one hand, there is a vigilant regulator – the Central Bank of the Russian Federation – with its vigilant supervision and tightening of requirements for the activities of microfinance organizations. On the other hand, there are borrowers who bear not only profits, but also the potential dangers of non-repayment. And from both points of view, “repeat” is preferable. He is more understandable, studied, and predictable compared to a new client. In addition, the costs of arranging his loan are lower, which saves companies money.” Based on these reasons, MFOs strive to work more with “returning” clients. It is easier for them to refuse a “newbie”, but to give a little more to a former acquaintance. And the very fact that in the structure of loans issued an increasingly large share is occupied by repeat clients, in general, is more positive than negative from the standpoint of the reliability of the MFO system, the analyst is sure.

But this phenomenon, in addition to the purely economic, also has a social dimension. You need to understand that repeat borrowers most often return for expensive microloans not because of a good life. They have a constant need to “catch money before payday” due to lack of income or any financial problems. Often, “repeaters” take out new loans to repay previous ones, for example, from another microfinance organization. These clients remain in many cases disadvantaged, bearing risks for lenders, which financial institutions compensate for with high interest rates.

“A high proportion of repeat borrowers means that people take out subsequent loans from microfinance organizations in order to pay off previous debts of the same organization,” says Dmitry Yanin, chairman of the board of the International Confederation of Consumer Societies (ConfOP). — These statistics indicate that borrowers from microfinance organizations are not getting richer. On the contrary, every year it becomes more and more difficult for them to service loans, which are growing like a snowball.” As a rule, repeated loans after several extensions end in default and the inability to pay their obligations, which is fraught with communication with collection agencies. MFOs themselves do not suffer from the fact that most of their clients cannot service loans costing about 300% per annum. Families are at risk here and then fall into the hands of collectors, the expert warns.