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Tapping into demand for a complete online lending experience

For the borrower, the experience itself is key

After spending declined over the course of 2020, consumers are making a comeback. According to Grandview Research, the digital lending platform market size globally was valued at nearly $5 billion in 2020 and is expected to expand significantly until 2028 at a compound annual growth rate of 24%. The scale of the market and its projected growth should bring it to the forefront of lenders’ attention.

This rapid increase in digital demand has resulted in dozens of fintech companies entering the market offering a full online lending experience. For many lenders, this competition is a threat to their existing customer base, as data from the Technology Services Industry Association shows that 67% of consumers across all age demographics and geographies prefer to use online, self-service channels. Only by making a concerted focus on expanding their digital services can lenders tap into the demand for a complete online lending experience.

For Borrowers, Experience is Everything

For the borrower, the experience itself is key. Using digital options to remove friction from the borrower’s journey delivers the efficiency and immediacy that’s expected from the online space. Gone are the days of handwritten applications or standing at the counter to share your information in the branch. Two borrowers may end up with the same loan amount and terms, but the amount of time and effort expended via the more traditional route will likely tip the scales in favor of the online experience.

With a paper application, it not only takes time for the borrower to complete but it requires additional time for a lender to review the application manually and deliver a decision. With an online application and decision engine technology, a process that may have taken hours or days can occur in just minutes.

Online lending’s increasing popularity can also be attributed to enhancements in the servicing experience. Borrowers can automate their loan payments, receive digital notices and reminders, and make payments directly in the lending platform, reducing the need for human interaction and further enhancing the borrower’s experience, even after the loan closes.

Online Lending Help Lenders Maximize the Bottom Line

While the customer experience is a key facet of online lending, there are significant benefits for lenders. Online lenders do not require physical storefronts around the city, with full-time staff in branches waiting to serve the customer whenever they happen to come in – they can be much more efficient. Digital capabilities allow lenders to serve more borrowers, as the technology automates much of their work. With the lending platform able to evaluate borrowers and deliver decisions on their applications, as well as service the borrower, lenders can use their time more efficiently and focus on the small percentage of customers who need human interaction.

Steps to Making 2022 the Year of Online Lending

With all the benefits of online lending, it is easy to wonder why there are still lenders today that are not investing in technology. The truth is that many lenders are held back by their legacy providers. Most lenders see the benefits of online lending, but their systems simply cannot handle it. With the use of APIs, however, lenders can add solutions that automate origination, servicing, reporting, and accounting to add more functionality than their legacy providers are capable of handling. Through one connection, lenders can open up a world of possibilities for back-end and front-end capabilities that promote efficiency and enhance the borrower experience.

Another factor holding lenders back is simply a reluctance to try new things; however, a simple shift in mindset can fix this. As with any new product, view the process as a journey. Start small by introducing online lending to the existing customer base and get comfortable with online lending. Next, look at new products or market niches that make sense. Consider financing opportunities around home improvement, large purchases, debt consolidation, or leisure travel, depending on the specific needs of the market.

Regardless of how each lender decides to approach online lending, start with a loan management platform that can make the process as easy as possible. The best systems will work alongside existing infrastructure, provide user-friendly loan application tools, strong underwriting, and comprehensive servicing to create an experience that exceeds the expectations of both borrowers and lenders.

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