A decade ago the financial lendscape looked very different. There was no need to compare business loans because banks dominated the space and that was all there was to say about it. People had just one or two institutions fulfilling their financing needs and everything was done in the best interest of these institutions. But things have changed. Fast-forward to today; fintech companies are shaking things up with funding facilities that put the customer front and centre. Changing expectations of Lenders as a whole. As a result, the customer has many relationships in place when it comes to their required financial services and this is causing banks to do due diligence. Now they are playing catch up.
So what changed?
The fintech revolution was sparked after the 2008 financial crisis. Born out of chaos, frustration with status quo and a need to rethink finance altogether. Banks responded to the crisis by pulling back and withholding funds. They put more stringent lending criteria in place and went into recovery mode. While this may have been necessary to get the world economy back in place, it also opened a huge gap to re-think financing altogether. To get creative and serve the customer differently and better. To not let the people down again.
Now consumers are suddenly able to compare business loans. They are able to pick and choose a Lender that will work with them and for them. And thanks to technology the process is now quick, easy and accessible to the ‘Average Joe’. Suddenly the banks have woken up and realized just how much market share they have lost. Resulting in them clamouring to adapt and (essentially) copy the fresh Fintech approach. The result, however, is a just-good-enough version of the best of what’s out there in an attempt to retain existing customers.
Keeping things competitive
Banks understand that they don’t necessarily need to be better than fintech companies. They just need to maintain a status quo with a sufficient product to keep customers close. But all this is really doing, is forcing fintech companies to innovate further and keep their prospect appealing in new ways. This is why fintech leaders will always edge out banks. They have the ability to think beyond the problem. Says CEO of fintech lender Beyond Merchant Capital Larry Prosser, “Ultimately all this competition is great for the consumer. It will ensure a competitive market where customers can compare business loans and automatically be matched with the lender that is really right for them.
Innovate with Automate
With this in mind, the way ahead is automation. Where smart systems will completely reduce the friction of any given transaction. This intelligent approach will automatically optimize data. It will provide a product or service that is completely tailored to the customer’s financial needs. Using technology fintech will essentially collaborate with the customers in order to understand their human objectives. And then give them exactly what they need. That’s pretty powerful stuff.
So for example – remember a time when you couldn’t port your mobile number between cell phone carriers. This created stickiness for the supplier. But it also resulted in inflated charges and disgruntled customers. But when the laws changed and customers could suddenly pick and choose their carrier, the providers had to come to the party and offer affordable competitive rates and better service. In other words, the thing that is now keeping customers loyal is good clean service, not a lack of options. This is where fintech is headed too.
The game changer
This is potentially a nightmare for banks because once automation reduces enough friction in the financial industry; banks can potentially lose their relationships with customers. They will boil down to nothing more than a utility to send and receive funds. Without relationships they are dispensable. And then we see that big gap open again… allowing fintech companies to swoop in, automate and match needs once again.
At the end of the day, figuring out how to weave intelligent automation into a product experience, manufacturing and production process or to compare business loans is crucial to the growth and success for fintech companies. The end result is an invisible, intelligent service that figures out everything for the customer and does it for them. Banks are getting better at keeping up, but the fintech trailblazers are the ones who remain close to their customer, responding immediately and with good intention.
Speak with a lending specialist today about funding the growth of your business.