Data protection is one of the top concerns in the banking industry, especially for lenders who rely on digital platforms to originate accounts and manage payments processing. The problem gets more complex – and more difficult to control – when employees use third-party document sharing platforms, and lenders engage in open banking systems.
P2P lending isn’t a trend. It’s an entirely new delivery vehicle that’s here to stay. Borrowers have already pushed peer-to-peer loan volume close to the $1 trillion mark, but launching an infrastructure that supports investor/borrower matching can still be a complex undertaking. Alternative and digital lenders who understand online origination and payments processing are the ones to be well positioned to succeed.
Running a small business is hard enough as is. But the reality we live in is such that in addition to the challenges of finding customers, paying rent, controlling quality and delivery of goods or services, one has to deal with the fact that more or less 60% of invoices are paid late. The idea behind factoring and invoice financing is to give a helping hand to businesses that struggle with this issue.
Customer financing, consumer credit, and in-house financing are different names used to describe the same concept – providing your clients with a way to pay for your goods or services in several installments with interest that makes it worthwhile for you. And while this marketing/monetization opportunity is starting to go viral among business owners, you still have a chance to be among the early adopters.
Building a viable lending business is no easy task. But in recent years, the democratization of technology and the rise of numerous FinTech startups has led to a great lowering of entry barriers into the digital lending niche. With 82% of businesses failing due to cash flow issues, the lending market, especially that of digital SME loans, presents a great entrepreneurial opportunity.
Consumers don’t love technology. They love the speed and convenience that technology delivers. Digital lenders who capture the lion’s share of new loans in today’s fiercely competitive marketplace, do so by minimizing a metric called time-to-funding. They regularly grant access-to-funds within 24 hours after the applicant clicks the submit button. Is your lending infrastructure up to the challenge?
Throughout the history of lending, it has gone through several stages of democratization. The big banks used to have a monopoly on selling quality credit products and people who didn’t want to go to a pawnshop had no other choice but to try and qualify for an unlikely loan from a traditional institution. But things have changed.
No credit scoring model will be able to tell you with a 100% certainty whether a borrower will return the funds or not. But for the lack of a better system, lenders rely on the existing models, use alternative ones, a combination of the two or develop their own, proprietary algorithms. The reliability and accuracy of the credit scoring model is the gatekeeper of your lending business. It’s what determines how much business you’ll get and how profitable it’ll be.
Your primary goal as an alternative lender is to maximize portfolio profits, and the first critical step in the process is onboarding. It’s like a first date. It sets the stage for the entire relationship. You can use automation software to gain process efficiencies, but it takes enthusiasm and creativity to truly engage the new borrower. Finance industry analysts say it’s an investment that pays back in spades.
The global digitalization is defined by the all-consuming drive to agility and quick solutions’ delivery. Companies recognize the need for wholesome automation for them to stay on the market, yet there’s still no definitive answer on whether it’s better to use monolithic or microservices architecture for a project. And the fact is that it depends.
Lenders are on a constant lookout for new demographics and audiences to convert into customers. And millennials aren’t just tech-savvy kids anymore. These are the people born between 1981 and 1996. So now they are somewhere between 22 and 38 years old and most of them are already operating on the lending market.