The benefits of digital lending are undeniable, and as more lending services enter your members’ market, it’s crucial to be aware of the latest trends in lending. Lending programs are being offered by more than just banks and credit unions – retail giants like Amazon are continuing to expand their financial services, aiming to create all-inclusive experiences for their current and potential customers.
Let’s discuss some of the latest lending trends in 2021 and beyond.
Lending-as-a-Service
With the emergence of fintech as a means to offer cheaper and faster online options for all banking needs, creating space in the industry for Lending-as-a-Service.
Lending-as-a-Service allows companies and brands to offer transparent, user-friendly financing solutions, rather than partnering with a financial brand to do it on behalf of the brand. This has recently made waves in the online automotive retail sector.
By using APIs to tie online applications to one another, your credit union’s lending services will need to continue integrating and streamlining lending services to capture more tech-savvy members of all ages who have embraced new digital solutions as a result of the COVID-19 pandemic.
Changes in Lending Trends Due to Member Behavior
As younger generations begin taking up more market share in the lending industry, your member needs also change. For Millennials and Gen Z, generations who spent much of their childhood and adolescence in the shadow of the 2008-2009 financial crisis, avoiding debt is a top priority. And many of these people are willing to take out loans to consolidate and pay down their current debt. This means they are more debit card-forward than your credit union’s older members.
This change in member behavior comes with higher demand for offerings that provide lending opportunities with fewer features attached that also mitigate the incursion of additional debt.
Increased Solutions for Bridging Business Capital Gaps
According to FintechTris, another big shift in the lending world includes attempting to bridge the gap in business credit offerings: “Working capital loans, equipment financing, and lines of credit are now readily available for this user segment through non-bank alternatives.”
There’s also an increase in companies looking for partners willing to invest in unsecured offers. Companies are entering the lending industry by allowing borrowers to use refundable security deposits as collateral for loans, which then allows them to receive their deposit back after 6-12 months of on-time payments.
Fighting Fintechs for Market Share
Credit unions are faced with growing competition from fintechs, and the solution will have to be focused on transparency, flexibility, and peace of mind, according to CUNA.
The key to success in this changing lending climate is to leverage your credit union’s reputation and commitment to providing high-quality member experiences by creating great lending opportunities and offering sound financial advice as we move into 2022.
The Future of Your CU – Your Way
IMS knows CU-specific tech solutions the way that your credit union knows exactly what your members need – from financial advice to insight on lending trends. Let us help with your virtual desktop and private cloud needs.
Contact IMS to set up your consultation or call 888-356-6043 today to explore our solutions and services.
