In an environment where everything is changing — the way we work, travel, meet, and shop — the world of credit is adapting quickly. The pandemic isn’t the sole cause, as Credit Lending companies have been upending traditional banking models for years. Here are some Digital Lending Predictions for 2023 and beyond. Enjoy.
Data Will Play A Vital Role
The use of data will significantly shape the lending industry. It will open up more options, give lenders the ability to make faster decisions and get them correctly, and understand their customers better to offer them better series. The proliferation of smartphones in consumer habits is driving more than half of the traffic on the Internet today. With access to several digital services, engagement is being pushed like never before. The result is an accumulation of data points that financial companies can smartly leverage. The silver lining? Lenders can actively analyze users’ spending habits and repayment schedules and accurately profile them. With such abundant data sets, significant value in the financial sector can now be driven.
The Rise of Embedded Finance
Embedded finance is the integration of banking services into non-banking websites and applications. We strongly believe that embedded Fintech will be a significant area and bring intense competition to the banking industry. As non-banking websites and applications begin to offer products and services for sale, new needs for banking services would be required to be integrated into their operations. Hence, a further rise of fintech products would show up.
The future of all lending will be AI-powered, coming within the next decade. The institutions that determine how to leverage that technology through partnerships or directly will win in the marketplace. Using AI to analyze credit decisions provides a faster, more accurate assessment of potential borrowers. For a lower cost and a more comprehensive range of resources, artificial intelligence can help provide companies with a better-informed, data-backed decision.
The BNPL Industry Will Expand Significantly
BNPL (buy now, pay later) will continue its rapid expansion in 2023. The BNPL payment industry in Africa & Middle East has recorded strong growth over the last four quarters, supported by increased e-commerce penetration and the impact of economic slowdown due to disruption caused by the Covid-19 outbreak. This growth is driven by the attractiveness of BNPL to merchants and consumers. Aside from organizations whose primary business is offering BNPL services, more mainstream lenders will introduce BNPL-type products to compete and reduce customer attrition. This could take the form of product innovation or partnering with existing providers; however, the focus will need to be on ensuring compliance with any new regulations that may be introduced (which could give banks an advantage, as they have more experience with regulations than Fintech).
Market Impact of Millennials and Generation Z
An influx of tech-savvy Millennials and Generation Z consumers into the financial markets have brought a fundamental shift in consumer ideologies and behaviors. ‘Instant gratification’ is the key for them, and digital habits such as online food delivery, cab booking, and grocery/essential shopping have only reiterated this mindset. They have a stronger emotional connection with technology and want faster and quicker services. This will push for higher automation levels. Lending firms would want to automate operations to serve their teeming younger audiences faster.
This year will be a significant one, and our digital lending predictions for 2023 just shows that we are fully committed to your growth and want to partner with you on this journey. With the data we provide, Merchants, Fintechs, Lending Agencies & MFBs can take an instant look at the health of a user’s account, analyze financial behavior and then make accurate credit decisions.
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