Flipping the Switch: How Locking Assets Unlocks Credit for the Poor
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With the flip of a switch, a growing number of financial service providers are transforming simple items like solar home systems and smartphones into cash loans for low-income borrowers. The secret to this transformation is remote lockout technology, which allows lenders to switch off assets when a customer fails to repay turning household items into collateral. Now, a new study out of Uganda offers strong evidence that this technology can enable providers to profitably serve low-income customers whose lack of more traditional kinds of collateral has long excluded them from access to credit.