Although the global pandemic continues, glimmers of hope, in the form of vaccines, are appearing that promise the potential to get the world moving again. And this is fantastic news. But what will the world look like, and will it ever be the same as it was before?

When it comes to lending, it’s unlikely things will go back to the way they were. Let’s take a look at some recent changes impacting the credit and lending industry and what these developments might mean for lenders moving forward. 

Digital Services Take Priority

A clear uptick in the onboarding and usage of digital banking services was expected during the pandemic. And that’s precisely what happened. Forrester reported in October that 14% of U.S. online adults used digital banking for the first time during the pandemic, and it seems like it won’t be their last time, with the majority approving the quality of service. Add that to an additional 14.2 million U.S. citizens who count a digital bank as their only bank, and it’s clear the trend is here to stay.

On the other hand, as digital services take priority in both neo and traditional banking structures, change is coming to brick-and-mortar branches. Across the board, banks have been cutting physical branches in favor of digital services for quite some time, which presents challenges such as access for some clients as well as risk management. 

As a result, banks are onboarding new technology to make services more accessible to all clients, from making transactions easier to making lending more straightforward and even automating processes such as risk management. 

Savings Increased

In 2020, the amount of savings held by individuals rose. “Forced saving,” due to lockdowns and restrictions, meant that many consumers were not spending as they usually would. And when they did spend, it was generally with an online retailer. This applies to four-fifths of the economy, with the exception of the bottom fifth in terms of income, who have continued to experience financial hardship.

At the same time, as savings increased, spending from the start of the pandemic through September decreased to 90% of the expected figure without a pandemic. What can we expect from consumer spending and saving habits going forward? Potentially, lower-income households could be more likely to seek short-term loans to plug gaps in their finances. Meanwhile, higher-income households may be more likely to seek other uses for their money, such as investments, rather than loans for the short term.

In terms of the broader economy, this could mean a potential for a cash-injection boom once governmental restrictions are eased. And this could be good news for struggling local retailers.  

Business Lending Up, Consumer Credit Down 

In 2020, consumer credit took a plunge. In late 2020, EY predicted that consumer credit would be down 5.6% for the year. That represents its biggest dip since 2011. Potentially, this is the result of lockdowns and various other restrictions. The exception is mortgage lending, which is predicted to grow by 3.4% in 2021. 

Additionally, business lending is also on the rise. For example, in the U.K., business borrowing for 2020 was forecast to see an 11% increase year over year. During the ongoing pandemic, loans have been instrumental for small and medium-sized businesses to help their businesses stay open long term. Many have used both private and government-issued loans to do so, causing the uptick.

There may be a continued increase in business loans after the pandemic, including business support and business opening credit. This element is something lending providers should prepare themselves for and ensure their lending strategy is Covid-19-proof, meaning they analyze the latest risk with the latest data, not just that which was true before the pandemic.  

Doing Business, But With A Little More Humanity

As the world moves closer to a semblance of normality, it’s time for lenders to take note of the lessons the crisis has taught them. First and foremost, be prepared. In making sure you’re ready for any turn of events, it’s vital to get on top of it before it happens. How? 

You may want to diversify your offers and invest in better online, multichannel or omnichannel customer service. Consider expanding into new services, as well. Depending on your current offerings, these could include a variety of digital lending solutions: point-of-sale lending, consumer or commercial lending, or a person-to-person marketplace. 

Two, we are all human. Although many services have gone digital, that doesn’t mean the human experience needs to. Whether it’s in a branch, on the phone or via a messenger, the care you deliver your customers will make all the difference in whether they stay with your bank or not. 

With so many options out there, what will set your business apart is being able to provide services without delay and with a little humanity. For example, work toward making your onboarding faster and customer journey frictionless. Also, it may be worth investing in lending market research and creating an updated, powerful marketing strategy based on a win-win approach, such as inclusive lending. This will help to make lending more accessible and more socially responsible.