Thank you for Subscribing to Retail Business Review Weekly Brief
Retail Business Review | Thursday, March 31, 2022
Lenders are using innovative tactics that have been established through study to boost collection efficacy and efficiency. Dynamic queue management and text communication are the two main advancements being used.
Retail lending and leasing have risen quickly in the decade since the financial crisis, with non-bank financial companies driving most growth. These institutions used technology to enhance speed and access to take market share away from more traditional sources of lending. Still, increased competition in the market and the demands imposed by younger, more tech-savvy clients are driving further loan lifecycle improvements. A low-interest rate and advantageous terms are no longer enough to attract new borrowers.
Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.
The lending game is progressively being won and lost at the lending process's front-end (originations) and back-end (collections). The middle — a flexible servicing platform is no longer optional.
Principal Loan Origination and Collection Trends:
"Digital honey": To guarantee a consistent flow of applications, indirect financing relies on old-school strategies such as forming agreements with dealers and other intermediaries. Nevertheless, getting an important number of potential borrowers to a lender's website in the direct arena is vital to business success. Therefore, lenders use digital marketing strategies like paid advertising and "canvas fingerprinting" to enhance traffic to their websites.
Several Payment Options: Once a loan or line of credit has been funded or leased equipment has been dispensed, the center shifts to ensuring regular payments. The trend is to agree on as many payment methods as possible, giving borrowers options ranging from wire transfers to credit cards. A new payment choice is for the lender to use programs like Plaid to withdraw funds from the borrower's bank account on the deadline. This is specifically true for lenders in the merchant cash advance industry.
Delinquency Management: Lenders are employing innovative strategies that have been established using a study to boost collection efficacy and efficiency. Dynamic queue management plus text communication are the two principal advancements being used. Collections managers can utilize dynamic queue management to create queues following conditions other than account aging and then assign these queues to individual collectors or a team of collectors. This has considerably enhanced collection quality.
More in News