Rise In Fintech Lending Creates Opportunity and Risk

Fintech is undoubtedly one of the fasting growing global industries.  Once known as “disruptors”, the companies that make up this vibrant industry have vaulted far past that now inaccurate status.  Clearly, fintech is no longer a buzzword to describe up-and-coming companies; rather, it represents a powerful segment of the worldwide financial services landscape.

For example, Statista reports that fintech companies provide nearly 40 percent of personal loans in the US, making them the largest provider of consumer loans in the nation.  Globally, fintech is predicted to continue to grow at an annual rate of 25%

That’s why we are so excited to be taking part in LendIt Fintech on May 25 and 26 at the historic Javitz Center in New York.  We’re looking forward to networking and sharing ideas with the industry’s best and brightest as we continue to support this crucial industry.

Our experience providing servicing and customer care support for Fintech companies has confirmed the limitless opportunity within this industry.  However, it also has allowed us to identify areas of risk and/or improvement that all Fintech’s should keep in mind as they grow their businesses:

Lending Risk: According to Harvard’s Working Knowledge blog, a study of 3.79 million loans for 1.88 borrowers revealed that consumers who turn to fintech lenders are more likely to spend beyond their means, sink further into debt, and ultimately default more often than people with similar credit profiles borrowing from traditional banks.

Fintech has been lauded for transforming the underwriting process by leveraging big data, AI, and Machine Learning for a more efficient process.  However, it is crucial that fintechs continue to monitor their customer profiles and have an action plan and a qualified partner in place to address delinquencies before they become defaults.

Compliance: Compliance regulations surrounding fintechs were a bit unclear and perhaps looser as the industry was created. However, the Consumer Financial Protection Bureau recently announced that it will be “utilizing a dormant authority to hold nonbanks to the same standards that banks are held to,” focusing on transparency, risk, and equity.

Now is the time for Fintechs to ensure they have the right servicing partner in place with the skills and experience to navigate the ever-changing and complex regulatory compliance landscape.

Customer Experience:  Another area that fintechs have been lauded for is providing a modern customer experience.  However, as the industry has grown, many experts have observed that there is often too much of a focus on “modern” and too less of a focus on convenience and customer-centric. In other words, in their push to automate the customer experience and rely on AI and ML tools, many have lost sight of what consumers really strive for…options in how they engage with a brand.  We’ve seen this with our Fintech customers and have worked hard to create the right blend of modern customer service options with the traditional human element that is still desired by many fintech customers.

Ready to Invest In Real Experience to take your Fintech portfolio to the next level of compliance, performance, and customer satisfaction?  Come see us at Booth 910 at Lendit Fintech or drop us a line at sales@servicingsolutions.