Small business lenders have unprecedented opportunities ahead of them, according to Rohit Arora, the CEO of Biz2Credit.
The only thing is, not all lenders are positioned to seize these opportunities. The ones that are, says Arora, are the lenders that understand two things. “They understand the changing expectations of today’s borrowers. They also understand how to leverage new technology,” Arora explains.
And the opportunities don’t just flow in favor of financial institutions. Small business borrowers stand to gain, too, says Arora.
Biz2Credit recently analyzed 30,000 small business credit applications. Based on the analysis, one of the top expectations small business borrowers have is for 24/7 customer availability. In fact, 51 percent of customer application activity occurred outside of regular banking hours or on weekends.
In other words, banks and other financial institutions that are not available 24/7 may be losing out on potentially half of their future customer base.
Fintech, an industry term for technologies used in the financial sector, is transforming small business finance on a daily basis, Arora observes. Both borrowers and lenders benefit from technological advances.
Financing information and options are more widely available online, opening up and changing how borrowers obtain credit today. Technology also is impacting how small business lenders manage risk, how payments are made, and how financial advice is dispensed.
The upcoming 10th anniversary of the Apple iPhone is a reminder of how much payment innovations have transformed business. As smartphones become commonplace, and financial services businesses migrate to the cloud, technology has affected small business borrowers’ experience with banks and non-bank lenders. For example, payments have never been easier. Payments can now be done seamlessly across borders through bitcoin, blockchain and other technological advances.
Small business borrowers also have benefited from lender competition. The cloud has made it possible for small business owners to reach multiple lenders at their fingertips. Consequently, financial institutions strive to outshine their rivals online, on mobile platforms, and within the branch system. For small business borrowers, this can mean speedier lending decisions and better pricing.
Banks and financial institutions are also taking a leading role to drive technology advances. They are partnering with some of the early Fintech pioneers and using their technology platforms. Lending institutions have improved their ability to make informed decisions and better manage risk. In turn, this benefits borrowers because savvy lenders are able to expand and grow their small business loan-making. “Potentially more money is available to small business borrowers,” adds Arora.
These and other changes in the small business lending landscape are being explored next month in the Frontiers of Digital Finance conference at Columbia University.
Biz2Credit and Columbia Business School are co-hosting the conference, taking place October 2-3, 2017. The conference will highlight the impact of technological advances on small business credit, asset and wealth management and payments. The conference also will explore digital finance growth and the changing structure and delivery of financial services. Speakers include some of the top leaders in Fintech and financial institutions today. For more information on the conference or to register, visit www.frontiersofdigitalfinance.com.
Fintech Photo via Shutterstock