Bugs and New Repayment System - Q&A With Kiva CS

[Guest]

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[Odette]

Oli,

You've made yourself perfectly clear.  LIke you, I would also visit the Kiva site daily and would add cash if I was short some credit to relend. 

I simply do not understand how this new repayment system will benefit the lender.  It's been days since I've visited the Kiva website and my interest is beginning to wane.

The repayment system seems too complicated and confusing.  The lack of communication between Kiva and the lenders leaves much to be desired.

Kiva is a great concept.  But perhaps because of it's massive growth it was bound to move in a more 'corporate' direction.  Pity.

For the moment, until the 'bugs' are sorted out, the communication between Kiva and the lenders is improved upon and I manage to have a better understanding of PA2 (if ever!!), the idea of re-lending or lending will need a serious re-think on my part.

[wthepoo]

Gerard,

also from me: thank you for posting the explanation and being here for answering our questions.

And supporting what Kerry posted: Please remember that not all confused lenders are to be found here on KF - think of a good way of communicating what you have told us, now, to the whole lender community. The additions to the Help Center are a good thing, but IMHO they are not enough.

I also support Oli's and Odette's post: The "old-new system" (partial repayments released nightly "after Kiva has received them") was not only beneficial to us impatient lenders who don't want to wait for the 16th of the following month but also - I think - beneficial to overall lending activity. You explained Kiva's reasons for changing it (again), fine, and I get those, too - but there may be side-effects not properly considered (?).


Of particular importance, I believe, is Robert's post - also because it is mentioning another bug (or is it?) not yet addressed... the loan Robert mentioned is (obviously) a 16-weeks-loan but listed as 3 months instead of 4 months (why couldn't it just say 16 weeks, instead?). There are other loans where the repayment term listed obviously is 1 month too short (e.g. http://www.kiva.org/app.php?page=businesses&action=about&id=72697&_tpos=1&_tpg=1).

Another bug not mentioned in your post is the quite annoying delay / blockage of switching between pages on the "lender pages".


Lastly, and I hope I don't confuse things, yet again, but I don't get your explanation on why we will see repayments when... one reason for this is surely that I really don't think that under the old system the schedule was computed from the fundraising date... it's definitely not what the lenders saw, and IMHO it would also make no sense to (internally) "bill" the MFI/expect a repayment from them before the instalment is due for the borrower - and that due date is inevitably computed from disbursal.

And when you say:

Most loans that had been repaying before the 15th of the month will get a repayment on or just after November 15th. Most loans that had been repaying after the 15th of the month will get a repayment on or just after December 15th.

, does this take into account that we (at least in most cases) have already been credited for actual early October repayments that under the new system the MFIs will only regularly be billed for on 15 November?

At least I don't understand why we should receive any repayments on 15 November if we are now in the transition period between old and new system...


Best wishes, and thanks again for your assistance, patience and time,
Wolfgang.

[Gerard]

Same here. All my loan repayments are counted from the disbursement date not the date when the loan was fully funded.

Ulli

That's correct - the overall theme here is that some repayment schedules will be out of sync. When that happens, you may not see a repayment post after the November billing cycle. We're working to put some numbers behind this.

[Gerard]

I believe the overwhelming message on the Kiva Friends site is "No, it does not make sense to us to cluster all repayments around a few days each month."  

I believe this will continue to be a thorn in Kiva's side as long as this type of loan repayments system is in place.

Perhaps it will be a thorn in our sides. But having one billing date is the simplest way to administer a system like this and minimizes the amount of staff time we need to make the system run properly. We may choose to do something different in the future, but this is the way it's going to roll for now. I think we'll have to take a wait and see approach to find out exactly the way that payments will cluster and which partners will pay immediately on the 15th because of net billing and which partners will have to fundraise/wire funds at a later point toward the end of the month or toward the beginning of the next month.

[Gerard]

With all due respect, Gerard, this is not what's happening now.  In my portfolio alone, I have DOZENS of loans through MFIs that have stopped paying over six months ago -- MIFEX and EbF come to mind, but there are others.  We have not heard that these loans are being rescheduled, nor what the status of these MFIs is.  I am certain there are hundreds of Kiva loans that are in this state.  Loans are not being moved to Default in the way you suggest above.  I prefer to think, as we have been told, that Kiva representatives are trying to work out some option with the MFIs that are in this situation, but we need to hear about it.  Promising status updates at the end of Oct. and saying nothing through the first two weeks of Nov., for instance, does not instill confidence.

I'd rather the MFIs work out some way to make good on the loans, but either way just TELL us something!

--Diane.

One issue that will always crop up with partners that fit Diane's description here: sometimes when we're working on a situation like this, we can't communicate what's going on until the very end of the process. Often situations like this are sensitive and require that we walk a fine line. Part of walking that fine line can mean silence to our lenders. I agree that we should communicate when we have information that we're able to provide. I also agree that we should not provide you with a deadline that we know we may not be able to meet. While the situations you're referencing may not instill confidence, I hope that the eventual outcome would. We are working on all of the above.

With respect to the default policy - what I posted is what we try our best to adhere to. In the two cases that you're referencing in particular, it would be ill advised to default a loan when we're not sure what the eventual outcome of any investigation would be. There's no good answer here, but as soon as we have an update that we can provide, believe me, we will provide it.

[Gerard]

Now it would appear that two-months after implementing a system in which liquidity was the goal, it will be reduced to a few releases a month.  This seems more of a step backward for lenders than a step forward.   In any case, my question to you is, from the standpoint of customer service, do you not feel that it would have been better to spend some time focusing on the explanation BEFORE the transition period rather than in the middle of it? 

Thank you for letting us know that this is a temporary transition period.  Would it not be a good idea to at least at this late date to post a notice on Kiva for your lenders that repayments are in transition and thank you for your patience?

Liquidity was a goal, not "the" goal. Increased transparency, and the ability to create a system where Kiva was not routinely fronting money to our lenders was paramount as well. I was referencing the pre-PA2 Kiva (circa August).

Obviously it would have been better to focus on explanations beforehand, which would have obviated the need for this thread, among other things. However, we didn't do that and we can't go back and change that now. All we can do is make sure we do a better job from here on out.

As I've said before in this thread, you'll be seeing lots of repayments clustered around the 15th, 16th, 17th of the month, but a partner has until the following 15th of the month to pay. Theoretically, you could still see daily repayments. However, providing lenders with a diet of daily repayments was never the intended goal of this system (that would be the one's I listed above) just a symptom of a transitional period. We should have told you to get ready for a time when daily repayments wouldn't be the norm.

We've posted some new FAQs for lenders to help them understand what's going on and some help text in spots that we think could be confusing. Honestly, the lion's share of the confusion that we've seen has come from our power lenders who had a deeper understanding of our systems and who were seeing more frequent repayments because of their loan volume. We have to strike a balance on our website between giving people nutritious content for their level of involvement and overwhelming them with details that they don't really care to know. If you want to see how the sausage is made, we'll be happy to show you, but most people don't! 

[AccountAbility]

Honestly, the lion's share of the confusion that we've seen has come from our power lenders who had a deeper understanding of our systems and who were seeing more frequent repayments because of their loan volume. We have to strike a balance on our website between giving people nutritious content for their level of involvement and overwhelming them with details that they don't really care to know. If you want to see how the sausage is made, we'll be happy to show you, but most people don't! 

While I recently used Bismarck's sausage analogy here, I would like to politely but firmly object to your reference to the power users being where the confusion lies.  I don't know how many of my friends, clients and contacts have expressed their bewilderment to me and said, "Since you are a Kiva advocate, please explain what is going on to me."

I still don't think I fully can do that.  (But we are getting there.)

Dan

[Gerard]

Gerard,

Thanks for sticking with us. We understand how hard all of you are working to resolve the outstanding problems.

I don't know how to interpret the bolded sentence. What many of us at KF want, and what we believe to be in Kiva's larger interest, is for a typical lender's repayments to be roughly uniformly distributed throughout the month. What kind of distribution can we expect once the system settles into steady state?

It's difficult to apply exact science to an inexact world, and so we can't guarantee uniform repayments, since when and how a partner repays depends entirely on the partner and their fundraising status on Kiva.

If most of our partners are fundraising more than they owe in repayments, you'll see the repayments from those partners come in on the 15th and shortly thereafter. If some of our partners are in pilot mode or are raising less than they owe, you'll see the payments spread out more over the course of the month as they wire funds to us or otherwise make payments.

It's agreed that an ideal world would have the maximum amount of repayments, maximum new money and maximum loans on the website to support both. However, it's critical for us to get on this billing cycle system, and how repayments are made will depend on the way our partners repay.

[Gerard]

Gerard,

someone else stated it before and I am sorry for repeating things, but I consider it very important:

The huge advantage for the lender as well as for Kiva during the two months of daily repayments was this: whenever I crossed the threshold of $25 I'd run to the Kiva platform and choose a new borrower. If I was close to $25, I started looking around, and then I caught a loan, and heck, $5 were missing, so I simply added those to my Kiva credit and made the loan. I was in strict relending mode, but still inserted some cash here, some there. After all it was only a couple $$$. Am I clear in what I am trying to say? With repayments scattered around the month, I was visiting the Kiva website much more often than before. And I think I made more loans than I normally would have. This means, Kiva can attract lenders to come back more often to the homepage and thereby increasing chances of additional funding. This will get lost when most payments are being made between 15th and 20th of each month...

I know, I was repetitive, but I was not sure whether that point had been made clear enough. For the lender, there is really no big advantage in the new system.

Point taken. Though I would disagree that there is no advantage. This is a transition period without repayments. After the 15th of the month it will be more apparent what the frequency of repayments will be. One big advantage of this system is that it makes it such that Kiva is able to stay around longer. Previously, since autopay was running and we had to front lenders for repayments that we had not yet received, we had to keep a pretty significant chunk of money in reserve to ensure that if something catastrophic happened, we could honor those repayments.

Since we're now only marking repayments that we receive, this is a safer system that will contribute to the longevity of Kiva. I think we can all agree on the importance of that point.

I do, however, see your point that you were more apt to visit Kiva daily and top off your credit when repayments were more frequent. We all agree on the benefit of that. However, we believe that this system has long term benefits that warrant the switch.

One thing to note is that, since this system helps to expand our system's capacity, it will eventually lead to an increase of loans on the website and support the ability to add more partners. The more Field Partners we have, the more likely it is that you'll have more frequent repayments.

[Gerard]

Oli,

You've made yourself perfectly clear.  LIke you, I would also visit the Kiva site daily and would add cash if I was short some credit to relend. 

I simply do not understand how this new repayment system will benefit the lender.  It's been days since I've visited the Kiva website and my interest is beginning to wane.

The repayment system seems too complicated and confusing.  The lack of communication between Kiva and the lenders leaves much to be desired.

Kiva is a great concept.  But perhaps because of it's massive growth it was bound to move in a more 'corporate' direction.  Pity.

For the moment, until the 'bugs' are sorted out, the communication between Kiva and the lenders is improved upon and I manage to have a better understanding of PA2 (if ever!!), the idea of re-lending or lending will need a serious re-think on my part.

Odette - this thread is intended to be a forum for those issues. If you have remaining questions, you can post them here, or PM me and I'm happy to answer them. I'm not sure what's more "corporate' about this system!

As I've said before - intended benefits are higher liquidity (partial repayments vs end of loan repayments), increased transparency (see the due dates for all of your repayments, more accurate disbursal dates, the ability to post loans with non-monthly repayment terms), easier posting for our partners (more loans on the website and greater choice is certainly a benefit) and the continued longevity and scalability of Kiva overall.