A point of view on the point of lending

Emerging technologies in the financial sector have the ability to transform the customer experience. In the same way we have seen the payment of goods and services evolve from a separate activity to something that is now often fully embedded in the purchasing process, a similar shift is anticipated for lending.

The incorporation of technologies, like Open Banking, AI, and innovative identity management and credit scoring solutions, plays a pivotal role in optimizing lending processes. These advancements not only improve efficiency for both lenders and their embedding partners when delivering services, but will also contribute to an improved overall customer experience for borrowers.

For example, taking out a small unsecured loan to pay for something like a major dental treatment, holiday, or home improvements, can be handled as part of the interaction with the vendor or service provider instead of via bank or lending institution separately. Of course, the banks need to get wise to this, otherwise they will be left out of the process completely. 

For merchants, partnering with established lending institutions to embed credit products within their offerings avoids the need for extensive licensing and regulation. This strategic move not only ensures customer stickiness but also opens avenues for potential revenue sharing.

In the B2B market, creative lending solutions integrated with invoice settlement can allow SMEs to manage working capital effectively, and also benefit large companies alike. Offering such solutions as part of the invoice settlement process within online B2B marketplaces provides a competitive edge. Credit rating, KYB, purchasing preferences, and so on, can be taken care of as part of the marketplace membership, avoiding duplication while fostering loyalty.

Embracing innovative technologies and collaboration are vital steps toward a future where lending seamlessly integrates into the fabric of everyday transactions, creating a win-win scenario for lenders and borrowers alike.