Pandemic effect could normalize online lending

Covid-19 will help normalize online lending and bring fintech into the mainstream, several industry players have said.

During the two days of the LendIt EU Fintech 2020 virtual conference, many personalities from the fintech and peer-to-peer lending world noted that there had been an increase in online lending, and this trend is expected to continue even afterwards. the pandemic.

“Everything we do has become extremely digital and online lending is no exception,” said Lisa Jacobs, Managing Director of Funding Circle in the UK.

“There has been a huge increase in the adoption of online loans during this period. “

Various speakers agreed that the introduction of government-backed lending options, such as the Coronavirus Business Interruption Loan Program (CBILS) and Bounce Lending Program, has made it easier for small and medium-sized enterprises (SMEs) to online financing. Meanwhile, the rise of mobile banking and contactless payments has helped demystify the world of fintech for many small business owners.

“We have all been in an acceleration of digitization,” said Marieke Flament, managing director of digital investment bank Mettle. “Now you have to be online. “

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Oliver Prill, managing director of digital business banking platform Tide, pointed out that now that SMEs have experienced the new world of digitization, they will be reluctant to return to the old world of manual in-person banking.

“The other thing that has changed is that businesses have become more open to the idea of ​​finance,” Jacobs said. “A lot of businesses that have taken out a bounce loan may never have borrowed before.

“This is a huge change in the behavior of small businesses that should support the industry going forward as I can’t imagine as a business owner wanting to go back to a very manual process once that you’ve seen how easy it is, how fast the customer journey is, and how quickly to borrow online thanks to investing in FinTech.

“So I think there has been this paradigm shift in fintech lending.”

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Conrad Ford, chief product officer at Allica Bank, said the increase in online lending could also help encourage wider adoption of open banking, and he predicted that fintech lenders could take the opportunity to promote their offerings. .

“At the start of the year, there was an original arms race,” Ford said. “We wanted our clients to use tools like open banking, but the reality is you offer it without forcing it.

“The world has changed. There are fewer lenders able to lend to SMEs and more SMEs in need of loans. SMEs are much more receptive to being told what process to follow.

Read more: Lenders Return to Non-Covid Finance

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David A. Albanese