Fiugot Top Reads – LendTech
Considered a success story of financial services disruption, lendtech is worth learning more about. We have sourced the following six articles to help give a better understanding of lendtech and to review some of the benefits and potential opportunities of this growing online business segment.
What the Heck is Lendtech?
If you’re just learning or want a simple refresh, this is a good place to begin. This articles covers the basics of lendtech, how it’s disrupting traditional players in the industry, what gives it its edge along with some challenges it faces along the way.
Forbes Fintech 50 2018: The Future Of Lending
Consumers have a wider selection of lending providers than ever before. Current trends show that alternative, digital lenders are receiving a larger piece of that pie. As big banks pulled back on personal and small business loans during the financial crisis, the door was kicked open for alternative lenders to make their move. Nine of Forbes’ Top 50 lenders for 2018 are alternative, tech lenders. Even massive organizations such as Goldman Sachs and and Amazon are making changes to emulate digital lenders’ success.
Digital Lending Must Go Beyond Eliminating Paper
Eliminating paper is far from the only objective a firm should have when planning their digital transformation. The process offers ideal opportunity to review the whole system and use digitization as a way to improve current practices, rather than simply re-creating the same, potentially inefficient, processes. Truly understanding the relationship between clients and lenders and what each requires (the ‘why’ and the ‘how’) at each step in the lending process are critical components of effectively maximizing digitization for everyone’s benefit.
Why Marketplace Lending Needs Less Transparency, Not More
“Consumers receive better choice, better access and often better pricing for unsecured loans than they would generally be able to secure easily through the traditional bank-based system.” However, balance is needed. Lendtech companies are more transparent with more data available to clients. Savvy investors use this to their advantage while less savvy clients may not have the same understanding – leading to poor results and creating an unfair playing field. Lendtech companies need to find the balance between giving enough information to attract savvy consumers, but not too much to deter less sophisticated investors.
Credit Bureaus Aren’t Going Anywhere for Now
Despite some speculation that banks may be looking for alternatives, data shows that for now, credit bureaus maintain a solid grasp on their long-established position. To move away from this model would take major change, however that doesn’t mean it will never happen. “Until banks find that traditional credit reports and credit scores no longer provide decent performance and low-enough default, they’re unlikely to chuck them.”
Kabbage Data Shows Mobile is the Future for Small Business Lending
It’s no surprise that mobile devices are changing the landscape of many organizations, including lending. Based on their research, Kabbage stated, “Today, 17 percent of all small business loans and nearly 15 percent of total dollars accessed via Kabbage are through mobile. At this rate, Kabbage predicts one of every five dollars funded to small businesses will be through a mobile device by the end of 2018.” This is a bold prediction worth noting.
It’s no surprise that mobile devices are changing the landscape of many organizations, including lending. Based on their research, Kabbage stated, “Today, 17 percent of all small business loans and nearly 15 percent of total dollars accessed via Kabbage are through mobile. At this rate, Kabbage predicts one of every five dollars funded to small businesses will be through a mobile device by the end of 2018.” This is a bold prediction worth noting. Read more
The data is clear; lendtech is a growing force. It has opened doors for new, innovative startups as well as one that traditional lenders can use to self-disrupt and effectively digitize their own organizations as we grow into the future.