Money Sweetspot: Hitting the sweet spot for financial inclusion
Sometimes bad things happen to good people. Sasha Lockley learned this first-hand as a child when her family endured tough times in the UK. Her grandfather passed away suddenly, leaving the family dairy farm exposed, meaning her dad needed to milk the cows rather than run his local bus company and eventually went bankrupt. Add to that, her mother passed away when Sasha was very young.
Sasha didn’t know it then, but those experiences would shape her understanding of the pressure that debt could bring to families and inspire her to do something about it by seeking financial inclusion for those who were excluded or judged by mainstream lenders.
She asked herself: what if there had been a community-purposed financial support system to help her family out of debt? One that didn’t penalise customers with high debt by charging them crippling interest rates. One that listened, cared, assessed your circumstances and offered a financial reset to help you get back into the black.
Sasha moved to New Zealand in 2006 and worked in the finance industry, including as a forensic accountant at the Serious Fraud Office. In 2019 she had what she dubs her ‘matrix moment’ when her two worlds collided. Her lived experience of tough times coupled with her financial knowledge and creative brain came up with the Money Sweetspot concept. She wanted to design a financial system to reflect that life is unpredictable and support people to navigate their way out of debt, to the point they were able to give back to their community and causes they care about.
”“People should be able to move through financial shock, not be defined by it.”
In 2020 Sasha left her executive role to develop the Money Sweetspot concept. She had lived experience, the financial nous and the motivation to do something to help those in the community struggling with debt, but she couldn’t do it alone. That’s when she and her business partner Meurig Chapman got together and started knocking on doors and tapping into their respective networks to bring the concept to life.
“This was a pretty hard concept to sell to potential investors in 2019. A social enterprise financial lender that doesn’t want to be the biggest, doesn’t want to focus on profit and wants to lose customers!” Sasha recalls. “But then COVID hit and suddenly people could resonate with bad things happening to good people and Money Sweetspot was born.
“It’s about creating a place for people to reset financially, and work through debt so they can get on with their lives.
“We’ve been in business only since the start of 2023, but some of the most rewarding feedback we’ve received is that people feel like they can breathe again. People who have been juggling and struggling and dropping a few balls are suddenly able to feel like they can breathe again,” she says.
“We wanted to create adult-to-adult relationships with our customers, not the parent-to-child approach that many financial institutions take. We listen, have empathy and are thankful that our customers have the courage to divulge their vulnerable financial situation to us.”
The concept is simple. Money Sweetspot provides a financial reset for people who are juggling multiple existing debts, often at interest rates of over 28%. The Auckland-based service bundles their client’s debt, sets an agreed interest rate (generally much lower than their existing loans), and asks that the customer avoids new debt and pays on time.
There are incentives too — if customers keep to the conditions they can donate $100 a year to causes they care about through The Good Registry, which has over 65 charities to choose from. Money Sweetspot also offers a financial education platform, and if customers engage in it throughout their journey, they can earn points that are redeemed against their loan or put into a savings account to help develop financial resilience.
“The start of the journey is about relief and being able to breathe. By being able to breathe again they have the space to engage in financial education,” Sasha notes.
Sasha Lockley and Meurig Chapman
“We deliberately established Money Sweetspot as a social enterprise, rather than a not-for-profit or a charity, as we wanted to demonstrate that you can be a sustainable and impactful social finance organisation without needing to charge high interest rates and debilitating fees. This does mean though that we must be really sure that people coming in are ready for the financial reset. We’re in the business of helping people out of debt, rather than keeping them in it — but that takes work from them and from us.
“In the nine months that we’ve been going we’ve helped over 700 families with $8.5 million of financial resets, and a further 400 with access to financial education. The vast majority of those people were paying well over 28% interest on their debt, while our average interest rate is 12–14%.”
That rate covers costs and is enough for the organisation to be sustainable, but Sasha and Meurig are still hoping to get other investors on board. BNZ initially came to the party with a $5 million facility for them to lend for their financial reset product, and now it’s $10 million. “That was courageous of a bank to give a brand-new finance company money to lend to an unproven social impact model,” Sasha says.
“About 20% of our customers are referred from banks and other finance organisations, which is great as they realise that we’re not competition, but a place to support customers whose debt is quickly becoming more of a financial struggle. It’s about being as inclusive as we can be to help community.
“While we can’t say yes to everyone, we offer our financial education, connections and referrals to financial mentors, and specialist support to all potential customers that come through our door. For example, we’ll provide a copy of their credit report and spending analysis, free access to our financial education platform, and tips about what they could consider doing to reduce debt — so even if we can’t lend to them, they’re better supported than before they came to us.
“We drive inclusion through building relationships. Money Sweetspot has been designed with people and impact, rather than growth, in mind, and the way we do that is to stay connected to community. For the next 12 months our focus is on deepening relationships and building those partnerships where we’re able to reach communities of people more easily. Our five-year goal is to provide free access to financial education to 115,000 people, helping them out of half a billion dollars of higher-cost debt.”
The Tindall Foundation is an equity investor in Money Sweetspot alongside other charitable investors Christian Savings and Anglican Care Waiapu. In its short life Money Sweetspot has emerged as a finalist in the 2degrees Awards for Best Emerging Business in Innovation and the Sustainable Business Awards, and won the Biggest Impact on Financial Health category at the prestigious Financial Wellbeing Impact Awards 2023 in London.
“Our vision is that by 2030 Money Sweetspot will be a financial inclusion movement that will have gone around the world, and we’ll think ‘why didn’t we always do it this way?’. I hope many places take the philosophy of Money Sweetspot to drive greater inclusion, acknowledging that life is unpredictable and by having empathy, rather than judgement, how much greater the world will be.”