Technology is shaping the way organizations operate today. Many companies are taking advantage of advanced tools to improve effectiveness and efficiency. Among others, the consumer and business lending sector is one of the industries that will benefit from embracing technology.
Despite the promising benefits of technology, many lenders are stuck with legacy systems and outdated models. Now is the time to uncover a new world of possibilities. Read on and we’ll list down some of the ways technology can help elevate consumer and business lending.
⦁ New Ways of Vetting Applicants
Vetting is one of the most important processes before approving a loan. It is a thorough investigation that will help in determining the creditworthiness of an applicant. This will give the lender the green light to approve or decline a loan. If this isn’t done right, the company can end up having many customers defaulting on their payments, which will be representative of losses.
Traditionally, lenders use the credit score of the applicant when vetting. While this is still the practice these days, it is often combined with more advanced methods. This is one way in which technology is beneficial.
Artificial intelligence is one of the technological tools that lenders can utilise. It is instrumental in evaluating a plethora of information about the applicants, including past loans and outstanding debts. From employment history to education, AI helps lenders evaluate their customers, providing a more comprehensive system for scoring the applicants.
By providing more comprehensive and faster methods of vetting applicants, technology speeds up the loan origination process. It enables faster decisions, which can turn into a competitive advantage for an institution.
⦁ More Effective Lead Generation
To grow its customer base, lenders should take advantage of lead generation. It is the process of attracting prospects and making them interested in your products and services. The end goal is to convert a lead into a customer. From creating online content to event sponsorships, lenders utilise an array of methods to generate leads.
With the help of technology, lending companies can create custom lead generation systems. A good example of this is what CreditNinja has done. From using a third-party agent, the business switched to an in-house system. The latter helped in the reduction of underwriting and marketing costs for every approved loan. Today, quick cash loans from CreditNinja are available in a short time because they are optimizing technology not just for lead generation but for other aspects as well. They are enjoying significant savings on customer acquisition costs.
⦁ Ethical Hacking
The mere mention of hacking can already raise eyebrows among the uninitiated. While hacking almost always has a negative connotation, it can be a good thing, even for consumer and small business lending. With the technological advancements and the growth of threats in today’s digital world, ethical hackers can be lifesavers.
Financial institutions, including banks and lending companies, are suffering from constant cyber-attacks. It is through ethical hacking that institutions can identify the weak areas in their systems that cybercriminals can take advantage of. Recruiting ethical hackers is one of the easiest ways to spot the vulnerabilities and prevent their exploitation. It minimizes the possibilities of business disruptions by demonstrating preparedness.
⦁ Utilizing Social Media
In the past, most lenders will rely on traditional platforms to promote their businesses. Such will include radio advertising and print, among others. Today, we are living in a digital era, and hence, those in the consumer and small business lending industry should keep up. Among others, this is possible by embracing new marketing mediums, including social media platforms. From Facebook to Twitter, lending companies must pick the right platforms and step up their marketing game.
Social media marketing is an economical alternative to traditional advertising. Not to mention, it has a wide reach, so ads have huge potential. The challenge, however, is to create engaging content that can convert a social media user into a customer. Lending companies should contract the services of experts in creating their marketing materials. The latter also includes studying the competition to determine what works and what does not.
⦁ Using Mobile Platforms
Before, applying for a loan was often tedious. It can require several hours or even days for companies to process applications and come up with a decision. Worse, there is a need to be physically present to submit relevant documents before vetting. With today’s technological advancements, such is no longer the case. Businesses are smarter and are using mobile platforms to speed up the process.
In one report from the Harvard Business School, the dissatisfaction of customers often stemmed from the difficulty of the application process and the long waiting time for credit decisions. These days, such should no longer be a problem in consumer and small business lending.
Applying for financing is now possible through smartphones, tablets, laptops, and similar gadgets. You can do it anytime and anywhere. Even in the middle of the night, you can apply, and it will be processed immediately. Calculating the monthly loan payments is also instant.
Once your loan is approved, you do not even need to go to the lender to retrieve a check. It can be instantly available on a mobile banking app.
⦁ Going Paperless
Going green is one of the major goals of today’s businesses. While consumer and small business lenders can do so in many ways, one of the best is by going paperless. Digitization of business processes will make this possible. Technology allows traditional paper-based processes to shift to digital platforms, creating positive environmental impacts while also reducing costs and streamlining processes.
One way that lenders can build a paperless business is by having an online platform where customers can submit their applications. With this, there will be no need to fill out forms or submit printed documents during the vetting process. Instead, they can all be done online. This is not only easy for the customer but also good for the environment.
⦁ Establishing Better Customer Relationships
Technology has also been highly influential in improving customer relationships. Consumer and small business lenders are using advanced tools to manage their relationships with their patrons, which is a way to ensure customer satisfaction and loyalty. Through technology, it is easier to stay connected, making sure that the business responds as soon as the customer has an inquiry.
The use of technology has made it easier for lenders to establish trust and rapport. It makes the customers happy, which means they are most likely to do repeat transactions. Even better, it also helps in word-of-mouth advertising as their customers can share how happy they are with their personal experiences.
⦁ Quick Market Entry
Starting a business is often a struggle for many people. It is capital-intensive and tedious. However, technology has changed the business landscape in recent years. It has made it easier for interested parties to start on the right foot. Even in consumer and small business lending, market entry barriers are low.
You do not need to have complicated and expensive systems in place. Instead, you can use existing cloud technology or software. Many tools are readily available for you to take advantage of. There is greater access for more people. It also increases competition, which means that customers will have more options.
⦁ Improve Market Research
Market research is at the heart of an effective business strategy. Consumer and small business lenders must utilize the best practices to gain valuable insights about their customers, competitors, and the market in general. This is another area where technology can prove useful. With technology, it is easier to make sense of a multitude of information and use it to drive better business decisions.
Tech-enabled market research will provide organizations with more accurate information at the fastest time possible. From customer surveys to competitor analysis, technological tools will help businesses make sense of available information. Insight-seekers will also benefit from automation, which will streamline the market research process.
⦁ Embracing the Blockchain
While it is most popular in cryptocurrency, blockchain is another technology that can disrupt the financial sector. Its effects are apparent not just in big banks but even in small enterprises, including those that are in consumer and small business lending.
One of the key benefits of the blockchain is speed. Managing and approving transactions are almost instant. To add, it is also flexible. Plus, it is transparent and secure, making it effective in reducing the instances of fraud. Not to mention, blockchain can also eliminate intermediaries.
Consumer and small business lenders must take advantage of technology before it is too late. The failure to harness advanced tools can be bad for business. It can represent lost opportunities, including customers and profits.
Above, we talked about some of the ways by which technology impacts lenders. It is causing a significant shift in business operations, resulting in better outcomes. Through technology, the vetting process is improved, market research is enhanced, businesses can go paperless, and mobile platforms are utilised, among other things.