Kate Hao is the Founder and CEO of Happy Mango, a New York, N.Y.-based data technology company that focuses on consumer credit risk assessment and serves community banks and credit unions.
Kate, can you tell us about Happy Mango’s mission and how it aims to help community banks and credit unions serve low- and moderate-income consumers?
Happy Mango’s mission is to make it easy and rewarding for financial institutions to provide affordable and quality financial services to those in need. We work with community banks and credit unions to expand their customer base by bringing their services online, reducing their costs and risk through digitalization, and creating unique financial products focused on low to moderate-income customers by emphasizing flexibility.
How does Happy Mango use process digitalization and data analytics to reduce costs for financial institutions and improve access to financial services for underserved communities?
Happy Mango has digitized the entire process from customer intake to risk analysis (or underwriting), document generation, and payments. Time-consuming manual steps and processing errors are eliminated. Notices and reminders to customers are delivered through automated text messages and emails. More importantly, enabled by our analytics and tools, our financial institutions can provide their customers with the help they need when they need it without incurring incremental staffing costs. For example, low to moderate-income consumers tend to experience high cash flow volatility. Payment flexibility is a very important feature in providing financial services to meet their needs. Happy Mango has implemented an “SoS” button on the borrowers’ interface which a borrower can use to request postponing or rescheduling a payment.
Correspondingly, the lenders have “Quick Action” buttons to simulate future cash flows under different loan modification schedules and respond to such requests quickly. Such features not only help the borrowers to keep their loans in good standing but also the lenders to minimize defaults.
Can you share any success stories or case studies of individuals or communities that have benefited from Happy Mango’s services?
Our client Spring Bank is a community bank based in the south of the Bronx. When Spring Bank tried to launch a small dollar consumer loan program to help their customers access affordable credit, it made only a handful of loans. That was because the dominant loan origination systems all required a minimum credit score and most of the bank’s customers had no or very low credit scores. We worked with Spring Bank and leveraged Happy Mango technology to build a customized online lending system that used cash flows, not credit scores, as the measure to make underwriting decisions. The program quickly gained popularity. Today Spring Bank makes small-dollar loans to thousands of borrowers a year and has become a renowned financial institution in its community. It is the only bank in the state of New York that has earned the revered B-Corp designation.
How does Happy Mango work with community banks and credit unions to understand their unique needs and challenges?
Community banks and credit unions have limited access to financial capital and resources. Nonetheless, they often have to comply with some of the same regulations as large financial institutions. When working with our clients, we focus on ensuring our service offerings meet both their compliance requirements and their net income targets. We start with launching one product that we know will be demanded in their community but is simple and low-risk so that it can be easily accepted by the regulators. From there, we help our clients scale by creating more in-demand products and expanding their portfolios.
Can you discuss any partnerships or collaborations that Happy Mango has formed with community organizations or government agencies to support financial inclusion?
In 2020, we began a partnership with the International Rescue Committee. Our initial project involved delivering financial assistance to immigrant families negatively impacted during the pandemic. Our collaboration then expanded to resettling the newly arrived refugees from Afghanistan by helping them establish their financial lives in the U.S. Most recently, this project has further expanded to help new immigrant families start small businesses and create job opportunities within their communities.
How does Happy Mango measure its impact on both financial institutions and underserved communities?
We help our clients innovate in product offerings, grow revenue, and reduce costs. We provide them daily, weekly, and monthly reports to monitor customer, portfolio, and revenue growth as well as loss due to defaults and delinquency. Our collective and ultimate goal is to help low and moderate-income families access affordable financial products and improve their quality of life. To that end, we measure the improvement of their financial capacity using credit scores, cash flows, net savings, and the reduction in the use of high-cost financial services, such as payday loans.
How do you stay up-to-date on changes and developments in the financial industry?
Besides following the news and the latest technology advancement in the industry, I rely much on my clients and colleagues in the Community Development Financial Institution (CDFI) communities to gain insights into the latest trends in development finance. For example, the convergence between green energy financing and expanding access to affordable credit in low to moderate-income communities has been emerging and likely will become a dominant trend in the near future.
How does Happy Mango balance the need for profitability with the desire to create positive social and environmental impact?
Delivering affordable financial services creates both social and economic value. Happy Mango’s technology speeds up that process and scales up its impact while reducing the associated costs. We help our clients reap the financial rewards of helping their customers in need and growing their customer base while reducing costs. We tie the pricing of our services to the volume and margin of our clients. When our clients make money, we make money, too.
How does Happy Mango differentiate itself from other fin-tech companies in the market?
There are several features that make Happy Mango unique among fin-tech companies.
We serve financial institutions and do not compete with them.
Our enterprise-level platform has a consumer-friendly interface that makes Happy Mango super easy to implement and use. No need for IT resources or hiring implementation and training consultants!
We do not regard our job as builders and keepers of “black boxes.” We can and will explain every technology and algorithm we use to our clients and their regulators.
Can you share any exciting plans or projects that Happy Mango has in the works?
We are creating a small business lending system that focuses on serving solopreneurs. From the borrower’s perspective, it is as easy and quick as a consumer loan. From the lender’s perspective, the risk assessment will be as sophisticated as a business loan but will take a fraction of the time needed for a full-blown business analysis due to the new processing and algorithm we have put in place. We expect to launch this new product with select clients of ours in the summer.
What advice would you give to other entrepreneurs who are interested in building a fin-tech company that supports financial inclusion?
If you’re interested in building a fintech company that supports financial inclusion, here is some advice that I have learned from my personal experience:
Start by understanding the needs of underserved communities;
Build partnerships with established financial institutions in this field, such as CDFIs;
Understand regulatory compliance and make it a primary consideration in designing your product or service;
Build trust with your customers and ensure that respect for privacy and security is embedded in your company culture;
Last but not least, be patient. Building a fintech company that supports financial inclusion is a long-term proposition. It takes time to develop solutions, build partnerships, and establish a customer base. Be patient and persistent, and focus on delivering value to your customers over the long term.
How do you see Happy Mango evolving and growing in the future?
Since the start, Happy Mango has focused on helping community banks and credit unions serve financially underserved communities.
As the communities grow in financial capability and strength, their demand will change. Happy Mango needs to develop the functions and capabilities to meet such changing demands. For example, when we first started, our platform supported the delivery of small-dollar consumer loan products, which were very popular as they filled a market gap. Then as these customers improved their financial standing, we added auto loans, mortgages, and more recently small business loans to the platform.
Such expansion in products supported on our platform was driven by our client’s desire to support their customers’ evolving financial needs. As our end customers continue to expand and grow, the number and type of financial products will continue to flourish on Happy Mango and so will the level of adaptability and flexibility of our platform.