Lenders are ever at the risk of running losses or plunging into cash flow problems if borrowers delay payments or fail to settle their debts altogether. They may also lose clients if their loan origination strategies don’t impress customers–because speed and convenience are increasingly important these days.
This explains why most of them are employing creative research-based methods to increase debt collection. Non-bank institutions are leading the origination and collection front thanks to their tech-savviness–these firms are using tech to speed up processes and increase borrowing convenience.
Loan Origination & Collection Strategies
Loan origination is a challenging task for any bank. It requires them to evaluate multiple parameters like the creditworthiness of an individual, his past financial conditions, and many other factors.
Below are some popular trends among digital banks.
Multiple ways to repay
After a loan has been disbursed, the lending company begins focusing on how to increase adherence to regular payments. An increasing trend among them is allowing customers to settle payments through different avenues, including credit cards, wire transfers, etc.
More digital banking institutions now leverage tools like Plaid to remit the agreed-upon amount from the borrower’s bank account when the date is due. This approach is common among MCA providers.
The Digital Honey
Banks are using digital honey to improve loan approvals, loan origination, and collection. Loan agents can’t compete effectively in a digital environment. Lenders need to get as many potential clients on their websites and convert them into customers.
Digital honey is an innovation that allows banks to attract customers directly through digital methods like paid ads and canvas fingerprinting. Such techniques boost web traffic, increasing the likelihood of a sale.
Delinquency management is a form of credit risk management. It’s the process of identifying, quantifying, and monitoring loss risks that result from delinquent assets in a borrower’s portfolio. The goal is to avoid losses by recognizing and acting on potential or actual delinquencies early.
With the lending industry changing in many ways, finance companies must adopt the latest collection and origination methods to survive in a competitive lending environment.
Author Bio: Payment industry guru Taylor Cole is one of the best payment providers who understand the complex world of merchant accounts. He also writes non-fiction on subjects ranging from personal finance to stocks to Cryptopay. He enjoys eating pie with ice-ice cream on his backyard porch, as should all right-thinking people.