Digital Advances Redefining Financial Services and Lending For The 21st Century

Digital Lending Services

Expectations are changing in the financial services sector, and firms need to adapt if they want to keep up with the demands of the 21st century. Financial risk analytics are opening up new avenues for operational efficiency and lending service models. In response, organizations can engage with customers in more intuitive ways, something that is increasingly necessary in a crowded and competitive climate.

Marketplace lending sets tone for change in 21st century

“Fintech innovators have been disrupting the financial services space.”

Fintech innovators have been disrupting the financial services space. By using financial risk management software to evaluate borrowers based on a wider range of data formats, these lenders have been able to reach out to new customer bases in a cost-efficient way. When an analytics platform automatically uses big data to assess a lender’s likelihood to afford a loan, the firm can process applications quickly and reach clients who may not fit within traditional credit models. The resulting situation is one in which small businesses, sub-prime borrowers and similar underserved groups have moved away from banks and credit unions.

In response, traditional financial services firms must adopt digital lending technologies that allow them to keep pace with these changes. A report from Lending Times explained that the rapid rise of marketplace lending is leading to a complete structural change in the financial services sector. The news source explained that:

  • The anticipated merging between banks and marketplace lenders is happening at a faster pace than expected.
  • The idea of marketplace lending as a specific loan type is disappearing as the term is increasingly used for any type of loan handled using digital risk analytics systems.
  • The relationship between lenders and originators will remain in flux, with them sometimes operating separately and, in other cases, working as a common entity.

Digital lending is transforming the underlying structure of the financial services sector. At the same time, it is creating customer expectations that are forcing firms to adjust.

Dealing with 21st century customer experiences
The transition to digital models isn’t just happening in isolated marketplace lending segments. Bain and Company found that many tech industry leaders are offering basic financial services, such as direct deposits to online e-commerce accounts, to make their products more accessible. It turns out that, when it comes to the major industry players, customers trust them as much as they do banks. As a result, many consumers are turning to alternative financial services models when the solutions offered provide more convenience and responsiveness than banks and credit unions.

The study explained that traditional firms need to adapt to digital, fast-moving customer-facing processes to engage today’s consumers.

Credit risk analytics plays a critical role in creating stronger customer experiences. Advanced data mining and analysis tools allow for automation in areas such as loan decision-making, fraud prevention and even enforcing regulatory compliance. Analytics can lay a foundation for large-scale digital transformation, and we can help you find success. At GDS Link, our analytics platform provides a holistic big data foundation that banks and credit unions can use to retrofit their processes to meet the shifting demands in the industry.

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