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.
Since entering the lending automation space in 2014, TurnKey Lender managed to become the industry standard by which the depth and quality of automation of a lending business can be measured. Some of the biggest benefits company’s clients boast include a significant portfolio growth, an increase in operational efficiency, and improvements in the clients’ lifetime value. And for the people who are still undecided as to which lending automation platform to choose, we’ve decided to take a closer look at the benefits businesses powered by TurnKey Lender reap.
The alternative lending industry has enjoyed continuous, double-digit growth over the past several years. When will this upward trend plateau? When big banks approve more loans than they decline. In other words – we don’t see the dark at the end of this well-lit tunnel. Even though savvy lenders have already carved out their niche, new players will find plenty of unclaimed opportunity.
The world of investing and borrowing hasn’t been immune to change. And peer-to-peer lending is one of the fastest growing trends in the world of finances right now. As more and more people start to question the reliability of traditional banks, many of them turn to alternative ways to make money. And whereas before the rise of FinTech, p2p was only possible within a rather small community, with the modern lending platforms the concept can finally scale.