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Success in this hyper-competitive retail lending and leasing industry is no longer reliant on having a compliant servicing platform. It is now a matter of keeping up with innovations in loan origination and collections.
Fremont, CA: In the decade following the financial crisis, retail lending and leasing have grown dramatically and are now powered by non-bank financial institutions. These institutions leverage the latest technologies to improve speed and efficiency to take over market share from the more traditional sources of credit. However, increasing competition in the sector and a growing, sizeable tech-savvy customer base has been driving further innovations in the lending lifecycles. An attractive APR and terms are no longer sufficient to attract new borrowers. Success in this hyper-competitive retail lending and leasing industry is no longer reliant on having a compliant servicing platform. It is now a matter of keeping up with innovations in loan origination and collections. Technology is rapidly reshaping the landscape of the industry.
Here are a few emerging trends in originations and collections that are reshaping the industry.
Indirect lending is still heavily reliant on old school methods of establishing partnerships with dealers and other intermediaries to secure a steady stream of applications. The tables have turned since the advent of digital technologies. Attracting potential borrowers to a lender’s site in sufficient numbers is essential for business success. This can be achieved with the right kind of digital marketing techniques. Companies can invest in [aid advertising and canvas fingerprinting to draw traffic to their sites.
Engage and capture
Once a prospect has arrived at the site and has been sufficiently enticed by the offers, it is essential to convert this potential prospect into a customer by ensuring that they complete their application. The majority of retail lenders experience high rates of application abandonment. This can be mitigated using a two-step process, employing educational videos and chatbots to keep prospects engaged, and implementing easy-to-navigate applications that allow candidates to either drag and drop or scan and attach relevant documents to streamline the application process.
Instant decision making
24 hour plus credit decision norms are a thing of the past. Once the application has been entered, borrowers expect instant decision making. The ability of the lender to meet these demands depends upon the completeness of the application and document capture process, ability to pull and incorporate bureau data in real-time, and implementations of a sophisticated auto decision making process.