Disruption in Consumer Finance; How Lenders and Consumers Co-Exist in This Time of Uncertainty

Lenders and Borrowers Working Together

The process of adjusting to COVID-19 disruption is well underway in the non-bank consumer finance market. Concerns about operability and deep losses are top of mind for lenders, while many borrowers, and prospective borrowers, are concerned about the ability to repay.

Some lenders are dropping anchor – they’ve stopped growing and are focused only on existing loan portfolios. They’ve pulled back on marketing. Their plan is to weather this disturbance until they are on the other side of it. Other lenders are steadying the course – they recognize an opportunity to serve consumers, even with a ton of challenges in play. They’ve tightened up underwriting. Their plan is to gather data and seek out the right strategies to serve borrowers with disrupted financial circumstances.

Non-bank consumer finance companies should already have a deep understanding of their customers. Many borrowers, and potential borrowers, are living day-to-day. Borrowers expect lenders to offer loan forbearances, payment extensions and other payment plan modifications. Key to success will be aligning the loan modification with an individual borrower’s circumstance.

Speed to Change in Service
For obvious reasons, brick and mortar lenders are accelerating timelines on projects to stand up digital transformation and related capabilities or enhancing existing capabilities to remove some of the manual processes that rely heavily on in-person staffing.

Across the board, lender service center operations will struggle. We’re seeing a significant uptick in customer support requests. However, lenders with a heavy dependence on now shuttered call centers and a of lack resources to make speedy change will most certainly pull back from the marketplace.

Lenders using proactive engagement tactics, and those that have deployed mobile apps, online self-service, live two-way chat and automated fraud prevention features, will be well prepared to support customer service requests.

Offering a Safe Pair of Hands During Uncertain Times
Unfortunately, in times like these fraudsters will use disruption to strike harder. Consumers are distracted and nervous, while lenders are trying to maintain loan portfolios.

This is a time when lenders need to take a serious look at their fraud controls. Lenders should question whether or not their online identity verification and fraud detection systems are effective.

Do they verify identities and detect fraud detect without friction? Do they ensure the safety of the identities of their borrowers and potential borrowers? Can their solutions scale as more business shifts online? Do they require significant manual intervention processes, which tie up resources that could be focused on helping customers? If not, now is the time to turbo charge the hunt for a partner that can help ensure seamless identity verification and fraud detection to give borrowers a positive experience that helps preserve and drive revenue, and secure a competitive advantage.

Non-bank consumer finance companies are the lifeblood for small businesses and consumers as they weather this kind of storm. Lenders that quickly adapt to serve the changing needs of their borrowers will be able to look back at this time with pride for the way they served the needs of their customers and emerged as stronger, more competitive businesses.

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