New lending technologies improve customer satisfaction and reduce risk by digging into granular customer data: personal, transactional, application, product-selection, and more. Join this VB Live event for insight into how and why fintech innovation is driving adoption across the industry and how it can transform your portfolio.
Access this VB Live event on demand right here.
[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":2079878,"post_type":"vblive","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,","session":"B"}']The future of lending is here, and it’s driven not just by the need for financial services to optimize their offerings but by customer demand for the personalized service we’ve–ironically–moved away from as the industry has grown.
“If we go back fifty years, you’d walk into your bank and you’d talk to your bank about your situation and what you were looking for,” says Spencer Robinson, head of strategy at Kabbage. “Then we evolved into this world of big banks and really broad segmentation, and got away from that sort of granularity for customers.”
While the growth of the major financial institutions have created more opportunities for borrowers, individuals have often been overlooked in the process. Enter the age of data.
“This sort of data availability, and the computing power to be able to process it and make these very granular predictions, is going to take us back to the point where we can, at a very macro scale, act on a very micro scale for each individual customer,” says Robinson. “We can understand each individual customer to such a degree that we can go back to truly customized product offerings.”
Large banks have seemed to be comparatively slow to adopt these new technologies, but they’re not being left behind, and the competitive advantage is closing. “Lenders have been making loans the same way for decades,” says Terry McKeown, practice manager, credit analytics, at Envestnet | Yodlee. “And now the lenders are getting used to new types of data at a new level of granularity. But we are seeing much higher adoption rates as time goes on because they do see the value in this data such as consumer transactions.”
And with this data, traditional financial institutions are not only increasing their own scale capabilities but really getting back to knowing their customers better, and getting to a point where they can offer better products to their customers and increase loyalty significantly.
Indeed, banks have an advantage that financial services companies don’t, says Sherif Hassan, founding CEO of Herio Capital. “Within their own client base, they have access to all the bank data that we on the outside are looking to folks like Terry [of Envestnet | Yodlee] to solve for us,” he explains. “I think they’re pretty far ahead. And if we’re seeing anything now, we’re seeing the rumblings of a little bit of resistance from the banks to want to share that data with third parties.”
And while customers are increasingly willing to give their information to third-party financial services companies, they’re not volunteering, says Saurabh Sharma, founder and CEO of Indus Insights. He’s found that consumers do not proactively reach out and share with a bank.
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“Essentially, if it is made part of an overall package or offering to the consumer or the customer, whether it’s a retail consumer or a small business borrower, if it makes their life easier and if it gives them a better product and a better price, reduces a pain point, by all means, says Sharma. “That’s what we’re hearing in the market.”
Though Robinson points out that the opportunity to get a fairer shake is deeply compelling to some customers.
“From our perspective, customers are for more involved, able to explain themselves from a creditworthiness perspective,” says Robinson. “Being able to show why they’re more than just a FICO score.”
The vital thing to remember, however, is the customer’s perspective.
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“While we often tend to think of these things as a data science question for the end user, the end customer,” Sharma says, “this is a real life need that they’re trying to address. It’s a loan that they’re trying to take to fund some of their medical needs, or it’s a small business that’s trying to get some short term loans to keep their business afloat or to expand their business.”
And if, through new technology, through alternative sharing of data, by connecting their different bank accounts and financial accounts in one place, it allows them to get the loan faster, get the approval faster, get the money in hand today so that they can start applying it to their business tomorrow — they’re all in.
To learn more about how fintech innovation is revolutionizing the industry in unexpected ways and creating new competitive opportunities, catch up on this latest VB Live event!
Don’t miss out.
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Access this VB Live event on demand right here.
In this VB Live event you’ll:
- Get insight into the trends and opportunities driving change in the lending and credit risk management industries
- Explore more accurate predictive ratings models based on alternative data sets
- Discover the future of commercial retail lending and credit risk management
- Learn how to improve credit decisions, collections, and portfolio management using new technologies and data analytics
Speakers:
- Spencer Robinson, Head of Strategy, Kabbage
- Sherif Hassan, Founding CEO, Herio Capital
- Saurabh Sharma, Founder and CEO, Indus Insights
- Terry McKeown, Practice Manager, Credit Analytics, Envestnet | Yodlee
- Evan Schuman, Moderator, VentureBeat