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The global lending market has witnessed revolutionary changes in 2016, with fintech playing a significant role in restructuring the lending system to be more dynamic and responsive, vis-à-vis the traditional framework of existing banking systems. Per the recent ‘Market and Research’ report, the global P2P lending market is to grow at a CAGR of 53.06% during the period 2016-2020.
Goldman Sachs estimates that when the marketplace lending industry comes of age, it could reduce profits at America’s banks by $11 billion, or 7 percent. Amidst the growing competition, technological interception and regulatory reforms, it becomes pertinent that banks address the upcoming challenges and leverage the opportunities ahead.
Omnichannel banking was the buzzword for 2016. 2017 will move on to the next level of banking: OptiChannel Banking. Optichannel banking strives for optimum utilization of channels and resources per the requirements of the customer. The optichannel approach is precise and cost effective as it matches the requirements with the appropriate channel and assists in cost control. Per a report from ‘The Financial Brand’, only 64 percent of banks believe that a digital-only communications strategy makes sense, instead opting for a hybrid model of physical and virtual meeting points….
Technology saw a spiraled growth in the current decade and has significantly impacted all industries. New age technologies like BoT (Bank of Things) are already reinventing the way customers and banks interact. For instance, the vehicles, properties and other types of loans can be marked on the GPS enabled IoT maps.
With the influx of Big Data and data mining, machine learning, though not a novel concept, is now being aggressively implemented in various industries, from financial services, healthcare, retail to transportation and multiple domains like, accounting, audit, marketing and sales. Per McKinsey Quarterly report, June 2015, in Europe, more than a dozen banks have replaced older statistical-modeling approaches with machine-learning techniques. By doing this, some of them have experienced a 10 percent increase in sales of new products, 20 percent saving in capital expenditures, 20 percent increase in cash collections, and 20 percent decline in churn. 2017 will further see a seamless integration of machine learning with the current lending platforms…
Another breakthrough technology disrupting the lending space is blockchain. With the inherent concept of open ledger, decentralized platform, smart contracts and integrated central database, blockchain achieves transparency, cost effectiveness, regulatory compliance and risk analysis in the lending process. The technology has already garnered a positive reception in the banking sector and is being hailed as the uber of banking….
The year 2017 will see banks onboarding the latest technologies and restructuring their framework to expedite and optimise their lending process to meet borrowers’ expectations. This would include a partnership with fintechs or tech giants to equip their lending services with technology, data science and automation.
Auke Veenstra, Head Of Europe & Global Business Development, Cloud Lending Solutions