Despite the lingering quarantine, the world is slowly
returning to “normal life” and aligns its daily processes with new
requirements. It is interesting to watch the course of events, because the crisis
opened up opportunities for innovation and learning, changed consumer behavior.
The business has focused on digital transformation, companies have increased
investment in cloud products, cashless payments have gained momentum, and
traditional retail stores have rushed to the Internet.
The demands of social distancing have put fintech in the
spotlight because digital financial services can help solve everyday tasks
quickly and safely under quarantine conditions. Thus, COVID-19 highlighted
infrastructure deficiencies and low levels of digital literacy of users.
The positive results are the growth of non-cash payments. Reluctance
to use cash, inaccessibility of banking infrastructure, and strict requirements
of traditional financial institutions for borrowers increased the demand for
non-bank loans and allowed this market segment to pass the beginning of the
crisis more smoothly. The need to reduce the time for managing finance and the
proliferation of smartphones will drive market growth in the future. Even
taking into account the coronavirus crisis, experts predict annual growth of
the global digital lending market at the level of 20% per year until 2025.
However, retaining customers during the quarantine period
when everyone is cutting costs is not easy. Market leaders use complementary
data to improve scoring and find a personal touch for different audiences.
Traditional credit scores are designed to serve people who have a history of
using financial products. However, this excludes a number of potential clients
who either do not have such a history or have an unstable income. Such
borrowers need loans and are able to fulfill obligations, but cannot prove
their solvency. The future is in using diversified datasets to find new ways to
attract customers and provide better scoring. To this end, financial companies
will forge partnerships with popular B2C companies that have user data.
It is important not only to get additional data but also to
learn how to work with it. Big Data analysis is hard to imagine without
artificial intelligence. By processing large amounts of information using
machine learning, AI will help to create the most popular product or service
for each market segment and improve scoring. Industry leaders are actively
investing in this technology. AI algorithms study the pages of borrowers in
social networks, and mobile operators offer their own scoring products by analyzing
In addition, AI is able to track macroeconomic trends and
monitor borrowers’ finances, alerting the lender when problems may arise with
the loan, or vice versa when the borrower can repay the debt ahead of schedule.
This will allow you to develop a proactive repayment plan.
The full digitization of the loan lifecycle will help
finance companies stay competitive in the 2020s, creating conditions for
greater transparency and cost-effectiveness while delivering the consumer
experience borrowers expect. They, in turn, want to fully control the process:
submit an application or receive a chat consultation at any time of the day,
instantly find out the status of the request, continue the process of applying
for a loan from the place where they left off and through the channel they
Today, so much user data has been accumulated that the
lending process can be easily automated, which means that the cost of the
financial product can be reduced. Large companies that have already studied
their customers are actively entering the financial services market. Amazon
provides loans to small businesses, Apple launched its own credit card,
Facebook launched a payment system. There will be more such projects in the
For their part, consumers become more demanding. COVID-19
taught them that digital technology can simplify everything from shopping
online to video chats with colleagues. Therefore, they expect a lot from
digital lending: an intuitive interface, exclusion of irrelevant stages, and
automatic filling of application fields, a minimum number of interactions,
warning about potential problems with loans … Most consumers are also
concerned about how the coronavirus will affect their credit rating, and
therefore are interested in financial literacy issues.
Banks and financial companies must remember that the
consumer is not the cause of the crisis. Consolidation and fewer startups will
lead to greater concentration in the sector and may slow down inclusion.
Therefore, the task of digitalization and implementation of innovations is to
increase the availability of financial services, reduce their cost, and
increase the security of personal data. The actions that will be taken now to
help the client will become the basis for the development of the company and
the ecosystem as a whole in the future.