Today, LendIt SF opens, and the leading experts are descending on Moscone Center to share the latest in innovation and lending. Over the last decade, there’s been an explosion of new business models from the early days, when lenders offered loans either in person, over the phone or online (Bill Me Later or Lending Club), to Marqeta’s modern-day approach to facilitating the lender/user experience seamlessly via card. As Marqeta continues to innovate to power businesses (like Kabbage, Affirm, Acima and Lendr) we’ve noticed trends we think will shape the next wave of immersive experiences. Here are five that we believe will help lenders become “top of mind” and “top of wallet” with users.
- Small business lenders move into point of sale: SMB lenders are now getting into point-of-sale by working with small and middle-market businesses to provide financing to their clients. Industry leaders such as Behalf and Direct Capital have learned to work directly with merchants to acquire their next customer, providing an exponential growth opportunity.
- Lenders pay creditors directly: Lenders have started to pay creditors directly with debt consolidation solutions. No longer are lenders dependent on the consumer to make wise repayment decisions. With mutual benefits, this new activity pays off the debt instantly, aids in the underwriting process and helps to reduce the lender’s default rate.
- New data points for SMB underwriting: Data is being used in a variety of ways. For marketplace sellers, revenues and the estimated value of inventory are being used to help determine creditworthiness and underwriting, and in some states, Amazon is sharing income information with government entities*. Ant Financial, an affiliate of the e-commerce giant Alibaba Group, is doing the same for their consumer lending. The program, called Sesame Credit, tracks personal relationships and behavior patterns to help determine appropriate lending decisions.
- POS lenders move to direct to consumer: Point-of-sale lenders are also switching gears, and are moving to direct to consumer applications. Once mostly dependent on merchants to drive consumers to a loan application, loan funds are now disbursed to virtual, tokenized or pre-paid debit without dependence upon a specific merchant (enabling lenders to onboard new merchants at scale). The new card solution model allows lenders to engage with shoppers earlier at the point-of-discovery online or on the aisle.
- Brick & mortar still trong: The rise of face-to-face payments shift as EMV and contactless payment methods for card and Digital Wallets become more essential in the shopping experience. Studies show that 42 percent of face-to-face transactions occur at contactless enabled merchants**. That means that 2 out of every 5 times a consumer goes to pay, they could have tapped their card or phone to make that purchase. Lenders (and merchants) have an enormous opportunity to reach consumers at the point-of-sale, providing payment choice, access and convenience with a fast lending experience at checkout so that no sale is lost.
These are just a few of the trends we’re seeing that are changing the levels of customer engagement in lending. If you’re able to join us at LendIt, we look forward to sharing more about these trends and others. You can find us in the SMB Lending Track discussing how our lending solutions can help grow your customer base. I’ll also be moderating the Data in Lending panel, and the Marqeta team will be available throughout the event for meetings and demos in the exhibitor’s hall at Booth #1419. See you there.
By Candace Sjogren
Head of Alternative Lending
About Candace Sjogren:
Candace is the Head of Alternative Lending for Marqeta, a modern issuer/processor of prepaid, virtual and credit solutions for on-demand services, e-commerce providers, and alternative lenders. Candace formerly founded and managed CXO Solutions, a management consulting firm that operated as an active “Executive in Residence” or member among the C-suite with each of the companies they served.
*Massachusetts-based Amazon sellers notified that it will start handing over their federal tax ID numbers along with the estimated value of inventory they have stored in Amazon’s Massachusetts warehouses, reports CNBC: https://www.fastcompany.com/40520979/amazon-will-start-giving-data-of-its-third-party-sellers-to-massachusetts-tax-officials
** 2016 Research from Juniper research: https://drive.google.com/file/d/17xSIMKJK8pdyIijv3JeozutPMF-Ty042/view?usp=sharing