Covid-19 will help to normalise online lending and bring fintech into the mainstream, several industry stakeholders have claimed.
Over the course of two days at the LendIt EU Fintech 2020 virtual conference, numerous senior figures in the world of fintech and peer-to-peer lending noted that there has been an increase in online lending, and this trend is expected to continue even after the pandemic.
“Everything that we do has become hugely digitalised and online lending has not been an exception there,” said Lisa Jacobs, Funding Circle’s UK managing director.
“There’s been a huge increase in the adoption of online lending over this period.”
Various speakers agreed that the introduction of government-backed lending options such as the coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme have made it easier for small- and medium-sized enterprises (SMEs) to access financing online. Meanwhile, the rise of mobile banking and contactless payments have helped to demystify the world of fintech for many SME owners.
“We’ve all been in an acceleration of digitisation,” said Marieke Flament, chief executive of digital business bank Mettle. “Now you have to be online.”
Oliver Prill, chief executive of digital business banking platform Tide pointed out that now that SMEs have experienced the new world of digitisation, they will be reluctant to go back to the old world of manual, in-person banking.
“The other thing that’s changed is businesses have become more open to the idea of finance,” said Jacobs. “A large number of businesses that have taken out a bounce back loan may have never borrowed before.
“This is a huge shift in small business behaviour which should support the industry going forward because I can’t imagine as a business owner wanting to go back to a process which is very manual once you’ve experienced how easy it is, how great the customer journey is, and how quick it can be to borrow online through fintech investment.
“So I do believe there has been this paradigm shift in fintech lending.”
Conrad Ford, chief product officer at Allica Bank, said that the rise in online lending could also help to encourage wider uptake of open banking, and he predicted that fintech lenders could take this opportunity to promote their offerings.
“At the start of the year there was an origination arms race,” said Ford. “We wanted our customers to use tools like open banking, but the reality is that you offer it but don’t force it.
“The world has changed. There are fewer lenders able to lend to SMEs and more SMEs needing lending. There’s much more receptiveness for SMEs to be told which process to go through.”
Read more: Lenders are returning to non-Covid finance