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Big data is changing both consumer behavior and loan products.
Consumers will have an easier time ‘rate shopping.’ With quick and easy access to credit information and lending products, consumers are likely to be more educated and critical of loans.
Opportunity Lending companies may benefit from taking a proactive approach in analytical interpretation of credit data. For example, they may be able to create heavily customized and tailored loan products by analyzing credit information.
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Peer-to-peer lending is growing and has the potential to change the lending landscape in the future.
Despite the high rate of loan defaults that came with the Great Recession, peer-to- peer lending continues to receive the support of institutional investors. Peer-to-peer consumer lending may change the lending landscape by better regulating interest rates and default rates. This new type of lending has already driven loan originations up by about 300 percent a year, according to the Chicago Tribune.
Opportunity With the support of institutional investors, and its rapid growth, peer-to-peer lending may push consumer lending companies to update their loan fees and interest rates.
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Subprime auto lending is ripe for disruption.
The sub-prime lending category represents $27.5 billion. It’s also highly fragmented and could benefit from highly tailored loan product offers.
Opportunity Referring to the future of the subprime auto loan industry, Arjan Schütte describes what is happening to the payday loan industry and what he expects will happen to the auto loan industry: “Better disclosures have led to better informed buying decisions; use of big-data and better risk scores have resulted in lower losses and better terms; new channels like merchants and mobile phones have both forced and allowed for better economics; and great design has created long-term brand loyalty.” Read his full article here.
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Consumer Lending Expected to Grow with US Economy.
The consumer finance industry is expected to continue to grow at a rate of 4 percent this year, 5 percent in 2014, and 6 percent in 2015 according to the latest forecast from First Research by INFORUM.
Opportunity Ride the wave. As the U.S. economy improves, so will the lending industry. Use the stability this growth brings to execute long-term strategies.
