Especially, the poor disproportionately suffers from compounding of interest. Imagine going to a payday lender (or heck a subprime credit card) and missing a payment. First of, those APRs are insane and on top of it, they compound and just makes it impossible for them to get out of it. We really believe compounding of interest should be abolished on the lending side. In the software world, when users struggle to use a product, the product fails, you don't ding the users. But in finance it is the other way around -- the consumer pays the price for mistakes the lender does. If more main stream consumers demand simple interest and no fees across the entire industry, we will slowly get rid of these evil practices and eventually benefit everyone. We are also talking to regulators on how we can make many of these principles (dead simple terms) as the model for future lending products.
The Economist recently had a very interesting article about how the poor end up paying more fees even though they are the ones who cannot afford it -- for depositing money they pay fees, for withdrawing money they pay fees..they really cannot win either way. While, it is harder for us to help the poor on basic banking (deposit type products) at this time but we certainly have plans to do so.
Lending can be profitable, we just don't think it has to be predatory for it to be sustainable.