Who Will Own the Marketplace During and After the 2020 Crisis: Lending Market Predictions
Even without the global health pandemic and economic crisis, 2020 was set to be a dynamic year for the financial industry. Fintech and digital lending were quickly pushing out some of the traditional financial services and products but the process wasn’t yet disruptive. Now, with the new reality kicking in faster than ever before, all lenders have to adapt their operations in a major way to adapt quickly. The contactless, fully digital financial relations are now forced into reality at a level not before needed. On the international scene, the country and state level, for enterprises, SME, and even individuals alike times have changed. Savvy lenders are strategizing new ways to overcome a wide variety of business challenges. TurnKey Lender’s goal is that when they come out the other end of these crises, they can have optimized their business so much with our technology that they can grow in new ways they never before saw as possible. Over the past decade, the top trends in the credit industry have skewed heavily towards technology, cybersecurity, and regulatory compliance. However, we started to see a noticeable shift from an internal, tactical, technology perspective to an external, strategic, consumer perspective. Successful lenders have adopted a customer-centric business model, and it’s needed to survive. Savvy lenders begin by assessing human needs and wants and then use advanced technology as a delivery vehicle to serve up faster, better, and more custom solutions. It’s a sea of change in the lending arena. Many lenders, however, are still playing catch-up compared to online retailers, where e-commerce giants like Amazon differentiate their brand with a superior user experience that nurtures a long-term relationship and optimizes lifetime value. The alternative lending space has also become crowded with a myriad of new online funding groups. It’s no longer feasible to use just online account access as a competitive edge, or only to make the mistake of trying to compete on price. With this approach, you find yourself in a race to the bottom, where you do little more than erase your profit margins when consumers are paying a premium price for speed and convenience. In order to address the incredibly complex challenges of today, you want to consider these three digital lending areas: Full-spectrum Credit Scoring Added-Value Credit Tools that Solve Multiple Consumer Problems (notice the term “credit tools” instead of “loans”) Hyper-Segmentation FULL-SPECTRUM CREDIT SCORING Full-spectrum credit scoring can expand your business in two ways. It helps you dive deeper into your current pool of prospects, by approving more loan applications without additional credit risk. And it helps you go wider, by expanding your prospect audience beyond a limited number of people with an established history at a traditional credit bureau. A bigger prospect pool with a higher conversion rate. It equals success in the best way possible. E-commerce marketers are often obsessed with conversion rate optimization (CRO). This is the process of constantly fine-tuning conversion from website visit to a closed sale. You are increasing the number of sales, without increasing the number of prospects. So this means you are increasing profit and ROI, without increasing the marketing investment. One of the key components of CRO in the lending industry is credit quality. Traditional bankers chase the sweet spot, a precise credit score that allows them to book a larger number of new accounts, without increasing charge-offs from bad debt. Unfortunately, this approach limits their prospecting to a small pool of established borrowers with substantial, documented credit history. Savvy digital lenders take a full-spectrum view. They partner with decision-management experts to identify surrogate credit indicators with a high propensity to predict payback behaviors. These data sources can include checking and savings account balance trends, money management practices, spending habits, education, employment, mobile device activity, social media engagement, e-commerce buying patterns, and psychometric personality profiles. Full-spectrum credit scoring harbors some hidden benefits. When we look in new places for new types of predictive data, we uncover pockets of high potential prospects just waiting to be mined. Plus, the information from these data sets can be used to personalize our products and services. An advanced software system is required to aggregate multiple data files into one comprehensive customer profile. FinTech software or a lending-as-a-service (LaaS) platform can provide the automation and intelligence you need to deploy a full-spectrum credit scoring program. TurnKey Lender is one such system to consider. The award-winning platform integrates with traditional credit bureaus, leverages a proprietary credit surrogate scoring system, and constantly fine-tunes AI algorithms using machine learning and data analysis. It’s the most advanced credit scoring module available in the marketplace today. ADDED-VALUE LOAN PRODUCTS (LET’S CALL THEM “CREDIT TOOLS”) As professionals needing to market and grow a business, we need to think in terms of consumer benefit, which goes well beyond established product attributes like credit line, interest rate, and repayment terms. For example, successful weight loss products don’t promote chemicals that suppress appetite. They make their prospects experience at a visceral level the pride and confidence they’ll feel when their slimmer self is walking along a crowded beach. Likewise, we need to help our own prospects experience the feeling of safety and security that comes over them when their loan is approved. The feeling of deep satisfaction when they see their wife and children happy on a family vacation. Or the feeling of abundance and optimism when their son or daughter starts that first day of class in a better school district. Or in this market, just being able to survive. As lenders, we spend our days analyzing dollars and cents, but for our borrowers, it’s not about the money. It’s not even about the things they can buy with the money. It’s all about the emotional payoff a consumer feels when they take possession of their purchase and the feeling of safety and having what is needed. To accomplish this end, our loan products need to evolve from a one-time monetary transaction to an ongoing client resource. A tool that supports
How Much It Costs to Digitalize a Lending Business
To get into the real lending game thirty years ago, one needed immense resources. And not just loads of cash available for crediting, but also money for opening and maintaining offices and branches, originators, servicing managers, underwriters, collectors, analysts, etc.
How Can Your Lending Business Benefit from Open Banking – From the Basics to Specifics
Open banking has turned financial services upside-down and inside-out. These data-driven programs cater to consumer needs and wants, instead of pushing out prepackaged products and services. What started as a regulatory directive in the UK has opened up a whole new world of opportunity for consumers and innovative lenders.
Why a Monolithic Enterprise Solution Is the Right Way to Go for Your Lending Operation
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.
The Digital Lending Landscape is Rapidly Changing – Here’s How to Adjust
Innovation is easy for no one. But staying in the comfort zone of outdated interfaces and technologies isn’t an option. With new players entering the lending arena and technology becoming more advanced and accessible, the speed of innovation has to grow as well.
How CaixaBank Improved Profits by Maximizing LTV
CaixaBank operates the largest retail banking footprint in Spain. Due to the high marketplace penetration, the key business challenge for them was sustaining long-term growth. The solution they came up with was their unique Click & Go loan. The product maximizes internal growth potential by targeting current customers with pre-approved, instant credit. As of now, this wildly successful program already accounts for 30% of CaixaBank’s personal loan portfolio.
Regulatory Compliance: Updates for Lenders
Remember this time last year? It was all-hands-on-deck for GDPR. Everyone working overtime to resolve a myriad of deployment details. Luckily, we don’t anticipate a regulatory compliance event of that scale in 2019. However, it’s important to understand the impact of the new rules on your individual lending operation, because smaller enterprises may be exempt from many of the new guidelines.
Digital Lending ROI: Positive Return on Technology Investment
Many lenders, especially credit unions and small local banks, lag behind when it comes to financial technology. It’s a short-sighted business strategy. Cost-benefit analysis shows a positive ROI when
Case Studies: Meritrust Credit Union Tripled Productivity with Automated Originations Platform
Unlike TurnKey Lender, which by any measure is still very young (we’re turning five soon, yay!), Meritrust Credit Union was founded way back in 1935 in Wichita, Kansas in the central plains section of the United States.
Regulatory Compliance: Checklist for Online Lenders 2019
Alternative lenders tend to push regulatory compliance to the back burner as they prioritize technology trends, marketplace evolution, and threats from new competitors.
Lenders Beware – New Competition from Unusual Directions
There’s rapid-fire change in the lending industry with new competitors emerging on a daily basis. Some of this competition comes from unexpected directions like e-commerce platforms, rideshare apps, and Wall Street giants
TurnKey Lender’s Elena Ionenko and Dmitry Voronenko on 2018 SBR’s 20 Hottest Startups Briefing
The annual Singapore Business Review’s 20 Hottest Startups Panel Briefing is one of the most representative and influential business gatherings in Asia.