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FinTech: mapping a long term future for a short term lender

We all know that technology is transforming business models.

Take the short term high cost credit sector and its estimated 10 million customers who are excluded from mainstream finance. This sector has been traditionally served by home credit providers and doorstep lenders. However, the advent of digital and mobile technology has revolutionised the way customers want to engage with credit providers. For the short term credit sector, having the flexibility to quickly utilise new fintech developments can provide an added edge over mainstream credit providers such as banks who may be slower to move with the times and update legacy IT systems.

Part of a short term lender’s appeal has always been the speed in which a customer can access the credit they need, for example a loan to cover an unforeseen emergency like a washing machine breaking down. It’s no surprise, then, that the short term credit sector has been at the forefront of harnessing the powers of digital to improve customer service. The shift to online platforms places the customer at the heart of decisions and allows them to apply for a loan as and when they need it, receiving a decision instantly, and on terms they can set themselves.

The pace of change in the digital world, however, means there’s no room for complacency. Any forward-thinking credit provider needs to stay on top of new trends in consumer behaviour. With more than three quarters of the UK adult population now owning a smartphone, developing mobile platforms has become a big focus, not least because managing finances on the move has become the norm for consumers and is an increasing driver of customer satisfaction.

While these new developments give more customer autonomy and control, streamlining application processes through the use of fintech also allows more scope for responsible lending. Putting automated systems in place to flag up issues, such as affordability, reduces the risk of a customer being accepted for a loan they may be unable to pay back. These new systems also benefit the lender, as they can detect and prevent fraudulent applications automatically, as well as simplify repayment processes.

For any lender in the industry, applying financial technology to their business model is essential if they want to stay relevant in modern credit. However, a data-driven approach alone is not enough to retain customer loyalty and satisfaction, an omnichannel approach is more likely to prevail. For example, despite customers increased reliance on online retail services, there is still a need for many retailers to have a presence on the high street. Similarly, a customer may want to apply for a loan remotely, but they are reassured by a strong and personable customer service network on hand should they be needed.

In all industries – but especially one that prides itself on offering credit solutions to those turned away from other providers – a customer-centric approach should always be at the heart of operations. The only way for a lender to secure a future in this modern world is to find a way to blend both customer and data driven practices, using one to support the other to provide an efficient but personable service.


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