Technology at the heart of new lending models

The short to medium term lending market is diverse, comprising customers entering the credit market for the first time as well as those re-entering.

The first-timers often include students or migrants who have no credit history and need to establish a line of credit before they can apply for a larger loan or achieve a more significant investment, such as a mortgage. Re-entrants, meanwhile, may have fallen off the traditional credit ladder as a result of a career or relationship breakdown and are looking to regain their footing.

Where this market was traditionally served by overdrafts and credit cards, established lenders have long struggled to help those without a typical credit history to fall back on.

To meet the needs of these customers, the short to medium term lending industry has embraced technology as Frederic Nze, founder and CEO of Oakam explained in a recent Finextra video. Through new technology, alternative lenders are able to make sense of large amounts of data quickly within the underwriting process to enable a credit risk decision to be made. The customer experience is determined by the end-to-end process. To be as rapid, flexible and streamlined as possible, the digital front-end needs to be supported by a digital back-end with as much automation of the risk analytics and approvals work flow as possible.