Competition is growing fast in both the consumer and business lending markets. There are more companies than ever now offering a wider range of lending services to customers looking for additional cash flow.
With the introduction of the Second Payments Services Directive (PSD2), banking data is no longer trapped behind an impenetrable wall, and this has driven transformation throughout the financial sector.
Ushering in a new age of Open Banking, FinTech companies are now rivalling traditional financial institutions by offering alternative finance solutions.
This has made the sector much more competitive and forced market leaders into action to enhance and evolve their lending propositions. These improvements have mostly focused on revolutionising the customer experience and increasing the convenience of lending wherever possible.
Improving the lending customer experience
Before legislation unlocked the opportunities presented by Open Banking, the traditional customer experience in lending was rigid. There was little variation between providers as the majority operated in the same way, evaluating each customer’s financial position using the traditional credit score to determine their eligibility and rates.
Now, companies use their customer’s bank account data to get a much more accurate financial picture in a much shorter space of time. This means they can offer loans faster which more effectively reflect the individual’s affordability circumstances.
Beyond a reduction in time to receive a loan, the arrival of new competitors in the field has radically changed the customer experience in the lending sector in other ways too.
Where once, customers were only able to access loans during bank opening hours, now they can get the finances they need 24/7. This added flexibility has radically improved the service available for customers looking for immediate cashflow.
Repayment options have diversified as well, with many lenders offering a wide range of load disbursement and collection options to meet the specific needs of the borrower.
With many of the backend processes automated, companies are also investing more resources into customer support and engagement, helping their customers choose the right product at the right time, and adding a genuine human touch to the process.
This is helping to drive and encourage customer retention, which is a great opportunity for lenders to maximise growth.
Why customer experience matters in the Instant Economy
The customer experience offers a great opportunity for lenders to differentiate in the market and develop competitive advantages that give them the edge. Lenders who can create a compelling offering that meets the needs of their customers will significantly drive growth - and this growth is likely to be more profitable too. By offering a more valuable and flexible service, customers will be prepared to pay higher rates for convenience.
In the world of lending, cost isn’t everything, and lenders are quickly realising that a great lending experience is worth its weight in gold.
Forward thinking lenders who focus on delivering the very best customer experience will be rewarded in an increasingly crowded market. By developing lending solutions that actively meet the specific needs of their customers, lenders will be able to deliver a unique proposition that maximises growth and profitability.