Gone are those days when businesses relied entirely on banks and financial institutions for funding. With alternative lending going strong, there are many ways for small and midsize businesses to fulfil their funding needs today. Here are a few trends that will help you understand the latest about the alternative lending industry:
Personalized approach to online lending
Online lending has been serving small business owners by increasing their convenience of obtaining capital. Many lenders have started using the personalization approach to guide buyers so that they can complete their transactions quickly and easily. The evolution of cloud-based lending and targeted mobile solutions, with the backup of powerful data analytics, has made this easier.
More and more lenders are now started focusing on creating value for their customers. They give valuable suggestions to improve the financial situations of their customers, based on their personalized data. They are also integrating lending with providing education on financial tools to come across as socially responsible companies that care about their customers.
Multiple solutions through one app
More and more fintech companies are now offering multiple products and solutions to their customers. In fact some online lenders even offer a full suite of financial solutions by partnering with other firms. The aim is to offer one-stop shopping experience through a single app, to increase the convenience and boost the loyalty of their customers.
Banks entering online lending
With fintechs leading the way, many banks have access to tremendous amounts of transactional data that allow them to provide better services to their customers. Most have even started implementing digital processes for faster and easier underwriting of loans. They have started modifying their lending structures by partnering with fintech models to reduce the cost of borrowing. They are becoming more transparent about their rates, fees, and structures of contracts.
Banks today are focusing on alternative credit scoring and portfolio management in order to provide banking access to the chronically underbanked section of the society. With growing pressure from innovative financial institutions and fintech lenders, banks are seriously considering online migration.
Real estate becoming more receptive to technology
Cost of acquiring new customers has been very high in the mortgage industry since not many customers tend to do repeat business with the mortgage company that originates or refinances their home equity loans. To change this situation, many mortgage lenders have now started offering digital home management platforms through which their customers can manage, maintain, improve, and protect their homes. They have started partnering with other players to create an extended ecosystem that can provide all the solutions that homeowners need, to manage their homes.
With the advancements in technology, the flow of information between lenders and borrowers is going to be faster and easier, improving capital accessibility significantly. The real estate finance industry is all set to embrace technology and change with times.
Alternative lending is here to make it easier for small businesses to access capital whenever they need it. It is not about disrupting banks or not working with them. We are going to see a lot more lending partnerships in the coming years that are going to change the face of SMB lending.