For Kiva's direct lending program, should we focus on lowering interest rates or increasing loan amounts available to borrowers?

Introduction

For Kiva's direct lending program, we're faced with a critical trade-off: should we focus on lowering interest rates or increasing loan amounts available to borrowers? This decision will significantly impact our borrowers, lenders, and overall platform sustainability. I'll analyze this trade-off by examining the product ecosystem, potential impacts, key metrics, and experimental approaches to guide our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• Context: Based on the current microfinance landscape, I'm thinking interest rates and loan amounts are key differentiators. Could you share any recent market research or competitor analysis we've done?

Why it matters: Helps position our decision within the broader market context Expected answer: We have data showing a trend towards lower rates but limited loan amounts Impact on approach: Would influence whether we prioritize competitiveness or uniqueness

• Business Context: I'm assuming our revenue model is based on a percentage of loan interest. Is this correct, and are there any strategic shifts in our business model we're considering?

Why it matters: Directly impacts the financial implications of our decision Expected answer: Confirmation of the revenue model and any planned changes Impact on approach: Would affect how we balance borrower benefit with platform sustainability

• User Impact: Thinking about our borrower segments, are we seeing any significant differences in loan performance or demand across different borrower profiles?

Why it matters: Helps tailor our approach to serve different user needs effectively Expected answer: Data on loan repayment rates and demand across borrower segments Impact on approach: Might lead to a segmented strategy rather than a one-size-fits-all solution

• Technical Feasibility: Considering our current platform, are there any technical limitations to implementing variable interest rates or loan amounts?

Why it matters: Ensures our recommendation is technically feasible Expected answer: Overview of current system capabilities and any planned upgrades Impact on approach: Could influence the timeline and scope of our recommendation

• Resource Allocation: How much flexibility do we have in terms of team capacity and budget for implementing and monitoring changes to our lending program?

Why it matters: Helps scope the recommendation within our operational constraints Expected answer: Overview of available resources and any competing priorities Impact on approach: Would inform the scale and complexity of our proposed solution