The lending business, just like any other, is not immune to change. Certain trends are changing the way we look at borrowing. How we borrow and whom we borrow from has changed in recent times. The market is now flooded with loan financers, and people looking to borrow loans are spoilt for choice. To be ahead of the curve, we have highlighted a few trends that will determine the future of the loan business.
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Non-banks Venturing Into the Loan Business
A few years ago, loans were offered mainly by banks. In recent times, with more people in need of financers, many organizations and companies are venturing into the lending space. They are using their trusted name to get consumers to turn to them for financial assistance. They also offer good rates, efficient service, and quick payments that turn things in their favour.
Organizations like PayPal are offering loans to their members, usually available within minutes. This efficiency means that people no longer have to wait for weeks to get their loans approved. Other organizations like Apple give loans in terms of their products with an affordable instalment payment structure. These kinds of incentives attract people looking for loans.
Drop in Consumer Loans and Rise in Business Loans
More people are venturing into small businesses either as their primary or an alternative source of income. This has led to the rise of business borrowing as people are looking for capital to start or expand businesses.
This has also led to the drop of personal loans. Lenders who predominantly depended on personal loans have had to adjust to keep their businesses open. Business financing is the future of money lending.
Digital Lending
The future of humanity is digitally centred. Nowadays, everything is being done online. Accessing your money, paying bills, getting a taxi, and now even getting loans. Banks and other institutions used to include a lot of paperwork during loan applications and processing. This involved lots of manual work and time-wasting. There were a lot of documents to verify and sign before one could get a loan.
In the present, you can do all this with a click of a button. Fintech companies are releasing tap to pay or borrow solutions. They are creating a platform where there is no need for banks. Banks will need to readjust and digitize to match today’s trends. Convenience is lenders’ most significant advantage.
There is a rise of the tech-savvy generation that is demanding digital solutions. Millennials started the move of using the internet to get solutions. Generation Z is expected to continue the trend, and this spells the future for money lending.
Fintech companies have been getting more than 50% of all loans since 2015. Traditional lenders will need to digitize to overturn this trend. Swiss banks have accepted and enrolled online lending, check sms lån to find how they did it and if that will make them the future of loans.
The Rise of AI and ML Integration
Artificial Intelligence and Machine Learning are the centres of Fintech operations. These organizations are using AI to perform tasks such as credit analysis in a few seconds before determining if you are eligible for a loan. The more AI continues to improve, the better the Fintech companies get.
AI will push the transition from partial automation with manual assistance to fully automated lending services. Having a future where robots will be monitoring our loans and spending trends is not farfetched.
The Rise in Small Loans
The ordinary borrowers are not money stacked, and many do not even have credit cards. These people depend on friends and family for loans. But not everyone is fortunate enough to have supportive or financially able people around.
These average earning borrowers are the people that are asking for loans to support themselves. Traditional lenders avoid giving small loans due to the amount of effort and finances needed to approve the loan. This left the lenders with little profit and didn’t seem sustainable.
However, the ordinary borrower is the one driving the money lending business. As they are the majority of the population, it is vital for money lending companies to focus on this group.
Final Thoughts
Money lending trends have changed in recent times. People no longer view banks as the only lending institution. Other companies have also realized there is money in the loan business and have flooded the market, offering consumers reasonable rates. Product companies such as Apple have also included incentives such as affordable products that you can pay for overtime. This has eliminated the need for traditional money lenders. These lenders must adapt and change to attract and maintain new clientele.