The Need for Speed in the Lending Industry

Consumers today are looking for convenience and flexibility, demanding mobility, transparency, and instant access to credit. However, banks are constrained by inflexible technology systems that are too slow to...

Snehal Fulzele 17th March 2015

Consumers today are looking for convenience and flexibility, demanding mobility, transparency, and instant access to credit. However, banks are constrained by inflexible technology systems that are too slow to adapt to the evolving consumer behavior. Banking growth is now being driven by young customers, who trust banks less and technology more, leading to the emergence of many alternative lenders in the market.

Despite their small scale, these emerging alternative lenders are fundamentally changing the way in which consumers and small businesses access capital. They are creating competition, transparency and delivering a better customer experience. These lenders are driving innovation in the lending sector, particularly in terms of simplicity and convenience of the application process and speed of delivery of capital. Technology is emerging as the key competitive advantage for these lenders to transform customer experience.

online-lendingWhile most lenders typically take weeks to decide on a loan application, few alternative lenders such as offer and deliver funds in minutes. All the major alternative lenders provide online and mobile services, and offer quick processes to apply and receive the loan. Some of these loan application processes take less than 30 minutes compared to the average of about 25 hours that consumers and small businesses spend on filling out paperwork at conventional banks before securing some form of credit. Upon filling out an online application, borrowers can be approved in hours and have the money in their account in few days, whereas in the conventional banking model they may not be approved for several weeks. Which lender would you rather do business with?

In addition, emerging online alternative lenders are expanding the market through delivering more loans to more borrowers. Today big data, analytics and web 3.0 applications allow alternative lenders to make decisions on loans by using predictive modeling, data aggregation and electronic payment technology to assess the borrowers. Traditional lenders generally focus on the personal credit history while alternative lenders focus on current cash flow and performance of the small businesses using a broad array of traditional and non-traditional data sources such as Yelp and Facebook. Many of these borrowers are good credit risks, but would have been overlooked by traditional banks as their credit profiles don’t match the banks’ narrow criteria.

You might have surmised that technology is the key advantage that these alternative lenders have. The right technology will provide them with a complete core banking system in the cloud at a fraction of the cost of traditional banking systems. The right technology is as fast to respond to changing customer demands as it is to delivering new products and innovations. The right technology embraces new ways of assessing risk, speeds applications and delivers fantastic customer experience day in and day out, no matter how fast the lender grows.



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