Monday, December 30, 2019

How Will Alternative Lenders Compete With Traditional Lenders In 2020?

There has been a belief that the alternative lending industry will never be able to stand neck to neck with traditional financing institutions like banks. However, as we stand on the last leg of 2019- ready to welcome a new decade- it seems the lending industry has finally shed off this misconception.

Almost any small and medium-sized enterprise can enter the alternative lending industry with a solid strategy backing up its operations. The next decade of the 2020s is going to witness more accessible cash flow, where traditional lenders would face stiff competition from alternatives like Mantis Funding.

But how will alternative lenders compete with traditional lenders in 2020? Let's delve further.

Technology As The Playing Field Leveler

Technology is the biggest factor that levels the playing field for traditional lenders like banks and alternative financing channels. The latter is gaining a competitive edge by relying on new Fintech solutions that help automate the entire lending process.

The result is out-of-the-box functionality like the one Mantis Funding provides. Mantis Funding reviews loan applications outside the traditional parameters of credit scores. Hence, offering a higher chance of cash flow for startups and SMEs.

Accessible Cash Flow

Alternative lending makes cash flow far more accessible for startups and SMEs. Often businesses in dire need of cash flow find it inaccessible due to tough provisions like high collateral and credit scores. As more and more alternative lenders branch out from the traditional funding approval mechanism, the next decade will make lending more accessible for such businesses.

Instead of high collateral, lenders would become more intuitive at predicting the risks of lending. Artificial Intelligence supported solutions, based on deep neural and machine learning, would help in the advanced evaluation of lending risks. For instance, Mantis Funding Reviews applications without involving high collateral stakes.

Underwriting And Decision

The next decade is going to see the fast development of an advanced credit scoring model with the use of underwriting automation. Businesses would be able to improve their portfolio and reduce credit risk in a far better manner. The loan underwriting and decision making will depend upon advanced out-of-box scoring algorithms.

For informed decision making, the system would provide more in-depth analytics to the approving officer that might be drawn in from a variety of channels, including the applicant's social networks, utility bills, and IT returns.

It is evident that 2020 is all about accessible cash flow, and the way the alternative lending industry is developing, traditional channels might be in for a big surprise. If the last few years are anything to go by, we see a substantial year-on-year increase in small and medium-sized businesses turning to alternative lending institutions. The alt-lenders have made this headway based purely on their competitive offers, flexibility, speed, and customer-friendly approach. The new decade will see more of the same!