Pathways to resilience: The impact of financial conversations on the financial capability of NILS applicants

Pathways to resilience: The impact of financial conversations on the financial capability of NILS applicants
No Interest loan Scheme (NILS) workers at a table in discussion with a client

Good Shepherd Microfinance is excited to publish the final report from our most recent research project, Pathways to Resilience. This research is an important step in understanding our impact on the financial capability of our clients. Specifically, this research focused on the impact of the financial conversations, which are at the core of the microfinance programs offered by Good Shepherd Microfinance and our network partners. These financial conversations are a key differentiating factor of our products as compared to those offered by commercial lenders.

Every day, hundreds of individual financial conversations take place throughout our network between microfinance workers and potential clients. These conversations provide a combination of support, information, and positive reinforcement to people who are reaching out for assistance. Topics that are discussed typically include budgeting, avoiding bank fees, managing bills and the high cost of fringe lending (such as payday loans and rent-to-buy contracts). They are also an opportunity to raise awareness of complementary programs such as micro-savings and financial counselling.

Pathways to resilience confirms previous research that emphasises the impact of the personal support that is offered to every applicant at each stage of the No Interest Loan Scheme (NILS) application.

The key findings are:

  • Applicants learn more and become more confident at each stage of the NILS application process
  • Financial capability peaks at the point of the financial conversation
  • Preparing for a financial conversation has an impact
  • Financial capability increases during a financial conversation
  • Financial capability normalises over time
  • The impact of the financial conversation varies. Our analysis reveals four distinct experiences, representing different pathways to financial resilience
  • NILS applicants are more likely to be willing to enter a rent-to-buy contract than a payday loan indicating an opportunity to raise awareness about the true costs of these contracts
  • NILS processes can be improved to enhance financial capability
Microfinance sitting at a table having a discussion with his loan provider.

The learnings from this research build our evidence-base to support ongoing efforts to enhance program design and maximise the impact of each financial conversation. These insights will also allow us to build capacity and capability within our service provider network, including providing learning and development opportunities for the 1,514 microfinance workers (paid and volunteers) who conduct financial conversations with our clients across Australia. The findings are also informing discussions for the development of new processes that will enhance the ability of our network to keep clients engaged with financial matters and supported during the life of their NILS loan and beyond.

No Interest Loan Scheme staff member Leonie speaking with a client

Pathways to resilience was made possible with the vital contribution of the dedicated provider network partners, microfinance workers and volunteers that offered their support. Finally, we are thankful for the generous support of Financial Literacy Australia on this project; without their help, a project of this scale would not have been achievable. We are confident the outcomes from this project will enrich the evidence base for future development of financial capability programs in Australia.

Read the Pathways to resilience: The impact of financial conversations on the financial capability of NILS applicants or an executive summary.

Pathways to Resilience

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