Could Traditional Lenders Recover Their Lost Ground from Fintech?

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Fintech startups are invading the lending landscape, and they are succeeding. From 2013 to 2018, their loan market share soared from 5% to 38%. This number is good enough for fintechs to rule this part of the financial services ecosystem.

In the coming years, upstart tech companies are poised to steal more revenue from mainstream lenders. In the United Kingdom, fintechs are expected to take over retail banking sectors, including mortgage lending.

To stay relevant, below are the things traditional lenders could do.

Accept More Payment Methods

Invest in credit card processing for lending companies. Much like other merchants, you should be flexible enough to accommodate cashless modes of payment and take new forms of money.

Payment is the most disrupted facet of banking, so you can’t afford not to innovate in this day and age. The fintech boom has raised the expectations of 21st-century customers. If you do not do what your tech-driven competitors do, you can quickly lose the interest of today’s borrowers and miss out on more business.

Put a Premium on Digital Channels

The explosion of smartphone usage across the world has made mobile apps more useful and helpful. Many people do not visit brick-and-mortar financial institutions anymore. Instead, they go online to interact with lenders and transact.

creating advertisements online

This phenomenon paved the way for the rise of neo banks, financial institutions with no physical branches. They exclusive operate over the Internet, allowing them to minimize their overhead and boost the efficiency of their services.

If you have a website and social media accounts, going digital is not exactly uncharted territory for your lending business. However, you should not use your online real estate for marketing only. Embrace fintech solutions to improve the delivery of your current services and develop previously unavailable ones to be more competitive than incumbent banks and credit unions and as attractive as tech startups.

Study New Financing Models

Traditional and novel lending models are not mutually exclusively. You can adopt the concept of peer-to-peer lending and crowdfunding to complement your financial products.

Take a page out of CMG Mortgage Inc.’s book. The company developed the HomeFundMe platform to help customers accept donations to raise down payment funds and convert users into customers.

The case of HomeFundMe is exactly what fintech is supposed to be. It should disrupt the system to create a win-win situation for all. With creativity, resourcefulness, and business acumen, you can capitalize on existing innovative technologies to address your lending company current pain points.

Partner With Blockchain-Based Tech Firms

Blockchain has been dubbed as a banking game-changer, and it is far from reaching its full potential. If you use it to excellent effect, blockchain technology can speed up transactions dramatically, reduce risk, give birth to better financial products, and promote transparency. Collaborate with a fintech specializing in blockchain to explore ways to improve your business with it.

The only reason traditional lenders are losing to fintech is resistance. If you consider tech startups friends rather than foes, you can preserve your slice of the pie as it gets bigger.