The pandemic hit consumer finance harder than other parts of the financial-services sector; how bad was it for Provident? How did 2020 compare to previous years?
The pandemic and ensuing lockdowns have challenged the stability and agility of our organisation. The pandemic has hit the loan industry on a number of levels. Consumers limited their expenses as their incomes had become uncertain. Our research shows that last Easter and Christmas holidays saw much more timid spending than in previous years. As lockdowns are being lifted, a sudden surge in consumer spending is expected. Part of it, however, might be financed from savings made due to limited spending options during lockdowns rather than from new loans.
Moreover, the Polish loan industry was severely hit by unexpected regulations which capped the interest rates that can be charged. As a result, loan companies limited risk exposure, by restricting consumers' access to financing. For some companies it was a death knell; they folded as loan issuance ceased to be a profitable business. According to sectoral research, almost a quarter of loan firms in Poland have gone bankrupt. As loans have become less accessible, a number of consumers have been pushed out of the officially regulated market and have become prey to loan sharks. Suffice to say that in comparison to 2019 (already in the red for the industry), the value of issued loans in March 2020 was 19.5% per cent lower year on year. Although the sector saw three-digit growth in loan inquiries in April 2021 (a lower base effect), the value of issue loans was 6.8% lower than in March. Therefore, our recovery will be relatively slow.
Because your business relies so much on personal visits of agents to your clients’ homes, you must have had to take radical measures to protect the health of both your agents and the people they visited – how did you deal with those challenges? What was the outcome?
The safety of our employees and advisers is a priority. Therefore, from the beginning of the pandemic, we have supported them in this difficult time. What distinguishes Provident among other loan companies operating in Poland is the fact that we strongly rely on an extensive network of field agents who visit our clients at home. Since March last year, due to security concerns, home visits by our agents have been limited. Although we have shown throughout the pandemic that we can successfully offer our products, a poll among our clients shows that 90% of them would like home visits to be resumed.
How has your workforce, mainly self-employed agents, responded to the demands placed upon them by the pandemic?
The last year has been very exhausting for all of us. Many months of work in abruptly changed circumstances have taken a toll on all our employees. That's why I couldn't be prouder of my colleagues who - throughout this difficult time - have shown dedication, understanding, empathy and stamina. Extreme challenges posed by the pandemic have triggered a new sense of belonging in our employees. They have doubled down on their efforts to help those in need and started a variety of initiatives. They gave over 1,000 Christmas gifts for hospitalised children, purchased over a hundred of gifts for children in care facilities, organised a virtual charity run, cared for dogs in animal shelters and provided help for refugees. The pandemic has built a new level of humanity in our company.
We also try to recreate opportunities for the employees to spend time together informally. For this purpose, remote ‘coffee moments’ are regularly organised, during which books, TV series, films and their own interests are discussed.
What permanent changes in the way Provident does business has the pandemic brought about?
The pandemic has strengthened the case for building resilience, especially to unexpected and dramatic changes. Therefore, employees' psychological health has become a priority. We will build upon our extensive experience in promoting initiatives that create a friendly working environment, integrate teams and foster positive emotional bonds with the workplace.
Since the beginning of the pandemic, Provident has implemented many initiatives that comprehensively support employees in building a sense of physical and mental security in the workplace. To this end, the Care Plan was implemented at the global level, under which employees received protective equipment and their workplaces were adapted to new conditions. Psychological assistance was also provided to help with remote work and maintaining a work-life balance. We also have our ‘heroes of normality’, who help in arranging the office space to enable comfortable work in sanitary restrictions. A Parent Power Group was also launched, as a training support for parents. In addition, our Mental Health Week took place during which employees were able to learn how to better take care of their mental and emotional well-being.
Provident has also joined a campaign organised by a leading entrepreneurs' association that aims at fostering the awareness among employers and employees concerning the importance of psychological health and the necessity to make this area a part of companies' daily operations.
I'm extremely proud that our efforts are recognised and appreciated not only by our employees. We have recently been awarded a Top Employer and a Silver CSF Leaf for our efforts in creating a friendly and ethical workplace.
How is Provident responding to new competition from FinTech start-ups in the field of consumer finance?
Provident is eagerly embracing new technological solutions offered by FinTechs. As we have adopted a hybrid model, combining personal service by field agents and online accessibility, our ambition is to be at the forefront of technological revolution that takes the financial sector by storm. As the first financial company in Poland, we employed a solution offered by Blue Media, a Polish start-up, that helps us verify credit score of clients through the access to their banking accounts. Moreover, we were also the first loan company in Poland to implement the BLIK payment system, to enable accessing a loan in the form of a cash withdrawal.
We will strengthen our efforts to ride the wave of innovation by expanding our management board, which now includes a director responsible for digital sales channels.
As a woman leader running a major company, how do you see the future of female leadership – in particular the added challenges of balancing work-life with childcare?
Remote work blurred the boundaries between professional and private life, which turned out to be a challenge, especially for mothers, who were forced to combine professional duties with childcare. The study by Dentsu Data Services and Provident Polska shows that women more often than men, due to social isolation, experience negative emotions such as loss of sense of security or anxiety and stress. Moreover, women struggle more with lack of mental comfort in everyday life, loss of sense of security, as well as a higher level of anxiety and stress. McKinsey research shows that senior-level women are significantly more likely than men to experience burnout and feel the need to be always ‘on’. As a result, they are more often than senior-level men likely to think about downsizing their role or leaving their jobs because of the pandemic.
However, it is also worth paying attention to epidemic statistics, which indicate that countries ruled by women - New Zealand, Norway, Finland and Germany – dealt best with the pandemic. In the face of an unimaginable crisis, women proved that they could fight it effectively build broad public support for their actions. This shows the importance of the natural ability to cooperate, dialogue, show empathy, combine intuition and emotions, as well as manage multiple processes at the same time. Therefore, solutions are necessary to increase the professional activity of women, to help them reconcile professional and family roles, and to help them acquire education in line with their aspirations.
How do you see the prospects for consumer finance after the pandemic? Are people becoming more cautious and selective in how they spend money – or are you witnessing the phenomenon known as ‘revenge shopping’ – with consumers catching up on things they wanted but couldn’t have because of Covid-19 restrictions?
Despite the digital surge, I think that personal relations will remain as a foundation for consumer finance. Our research shows that human assistance in managing personal finances, including loan decisions, is still desired. Therefore, our hybrid approach to consumer service will certainly give our future business operations a stronger footing. Nonetheless, digital sales channels will also flourish, as the consumers flock towards online and touchless payments – a poll by the Polish central bank shows that card transactions made over the last year have been worth twice as much as those made in cash.
Consumers will certainly pay more attention to what they purchase, as they are increasingly interested in how businesses tackle the pandemic and climate change, as well as in their stance when it comes to pressing social issues. Therefore, companies are concentrating on values they stand for to foster and strengthen emotional bonds with their customers.