Did you know that the lending industry will never be the same? The global pandemic has accelerated the rush for a fully digital lending industry. As fully digital lending becomes common to all sectors, so do the expectations of speed and safety.
Both lenders and borrowers have a need for greater speed while maintaining transparency and data privacy and management.
Digital lending is a key opportunity for competitive differentiation. This is not just about speed of decisioning and fulfillment (the important basics) but also about delivering personalized customer journeys on a scale never seen before.
—Nigel Moden, EY EMEIA Financial Services Banking and Capital Markets Leader.
Consumers want to have access to loans in a quick and practical manner, while lenders want to make sure they have the tools to obtain all the required information compliantly.
Customers will continue to drive significant changes. If your company is able to understand present and future challenges, you will be able to satisfy customers needs and even reach untapped markets by providing customers with new opportunities.
Current Challenges for the Lending Industry
- Embracing the digital era: The digital transformation is something that many financial institutions are still trying to figure out. Even if your company embraces digitalization, you still have to deal with processes and user experience.
- Complicated origination process: Today, your customers have huge expectations when it comes to speed. If your company takes more than a couple of hours to deliver responses for loans, you risk losing potential customers to faster competitors.
A 2020 study showed that 42% of borrowers quit their applications because they found the process slow and complicated. On the other hand, another study found that 53% of borrowers received their funds in a period of 24 hours after applying.
- Document handling and data: The demand for speed has made paper documents a thing of the past. Your company needs to not only process digital documents, but to extract the necessary data from them while being compliant with data handling and privacy laws.
- Compliance: Since digital lending is a relatively new sector, regulations are always changing and adapting. This means that your processes have to account for regulatory compliance at every level.
Future challenges for the lending industry
- Customer expectations: The era where banks, financial institutions, and Fintechs set the expectations is now gone. Customers will set the pace in the future. Especially as the millennial generation becomes the majority demographic, and will want companies that not only understand their needs, but anticipate them.
- Competition: Traditional banks are no longer customers’ only option. Small and medium enterprises (SME) have grown at a very fast pace, and this trend will continue, as customers demand fast credit scoring and loans directly through digital platforms.
According to EY’s Global Banking Outlook 2022, “63% of SMEs still prefer traditional banks for their financial needs. But the use of competitors is increasing – 56% of SMEs use a banking and payments FinTech service.”
- Disruptive Technologies: The pace at which new technologies reach the market is constantly accelerating. The financial companies of the future can no longer depend on long-term business models that don’t factor in new technologies and are designed to adapt on the go. In short, if people like a new technology, you will have to use it.
- Access to opportunities: The rise of Fintechs and tech companies that are constantly disrupting the financial sector has also led to a larger number of the population having access to loans. However, there are several restrictions that still keep billions of people from financial opportunities.
The importance of equal opportunities to overcome present and future challenges
When you think about the present and future of your company, it should be clear that customers are center-stage. As previously mentioned, technology has empowered people and set the standards for financial services. However, what if billions of people still can’t have access to loans?
Did you know that 1.1 billion people in the world don’t have access to their identity? This means that they don’t meet the industry standard to be considered for loan applications.
While many companies see this as a simple consequence of strict requirement standards, they fail to see the fact that they are losing out on thousands, millions, and even billions of potential customers.
What if your company could onboard all these users while still verifying their identity, handle their documents and data, and reduce risk and fraud, all while staying compliant?
If tailoring your solutions to customers represents the majority of present and future challenges, then providing opportunities for billions of people makes financial sense.
But, how exactly can you provide access?
How MetaMap brings your company closer to potential customers
You can choose to see technology either as a challenge or a solution. At MetaMap we choose to see technology as the solution for both lenders and borrowers.
With technologies such as:
- Onboarding through an API
- KYC /AML compliance in minutes
- AI technology to fight fraud
- And +25 more.
We want to help unite your company and potential users so that you can open the doors for each other.
Companies can achieve fast, secure, and reliable onboarding of their users around the world, regulated with KYC and AML standards, which would allow you to forget about regulations and focus on growing and unlocking new products.
Do you want to be part of this ecosystem of +550 companies worldwide? Schedule a free trial of our product today! And take advantage of the opportunity to unlock borderless growth.