In the past decade, technological advancements have changed our daily lives beyond recognition. There is no surprise, therefore, that the demands of today’s consumers are forcing businesses to rethink the way they service their customers. The demand for immediate, round-the-clock access to information raises expectations in nearly every industry – and the lending market has to respond to the needs of the modern consumer.
Today’s consumers have access to a larger range of financial products and providers than ever before, finding and comparing lending producers at the click of a button. However, Freedom Finance’s new research has found that 45% of UK adults feel overwhelmed and anxious by the process of making important personal finance decisions. As a result, over a third of adults are regularly delaying or not making personal finance decisions. This carries real consequences – a failure to switch or consolidate credit card debt or personal loans are costing UK consumers £16.2bn per year.
Tackling this personal finance paralysis needs to be at the heart of the developments ushering in the future of lending. In a market saturated with choice, automated technologies can bring about an increase in clarity and help consumers feel empowered and in control of their finances. Recent developments in machine learning in the personal finance space are already starting to change the way the lending market operates. Lenders should embrace these digital improvements, as the right blend of technology and human expertise can greatly improve customer journey and tailor lending solutions to customers’ needs.
At Freedom Finance, working with operating systems such as DataRobot allowed us to use machine learning to improve each individual customer experience and address the personal finance paralysis. With the ability to assimilate endless ‘rules’, the system learns the right outcomes and options for each customer journey. Taking out a loan can be a big decision, and customers require a lending platform that presents options in an easy to understand, tailored way that does not add to the confusion of the modern personal finance market.
Apart from greater clarity and tailored results, those technologies also encourage an increase in efficiency, with faster processing times and lower costs. This allows lending platforms to become more competitive and profitable and provides consumers with greater reassurance that the options presented to them are the right ones. It’s this reassurance that consumers want: our research found 71% of UK consumers want more clarity from financial service providers about which financial products they qualify for and which are ‘right for them’.
It is likely that the user interface in a decade from now will make our smartphones feel more like typewriters. Robo-technologies will provide consumers with voice and visual assistants, as well as fraud detection, and open banking solutions. In the future, the most interesting advancements for lending platforms will come from the convergence of multiple technologies, for example, artificial intelligence (AI), augmented reality (AR), virtual reality (VR) and blockchain solutions. Customer centricity and control will continue to grow, while blockchain solutions will provide the backbone to an internet infrastructure where customer data is governed by the owner and their own personal operating system.
The main challenge of technological advancements that lending platforms should be mindful of, however, is the risk of allowing for too much autonomation without adequate transparency levels and measurement of results. As such, while operating systems will become self-managing, the relevance of human touch should not be underestimated. A right balance between human expertise and digital solutions can allow for seamless end-to-end customer experiences that will set apart the successful brokers from the rest.
With innovative ideas coming to the personal finance space from fintech providers, the future of lending is, without a doubt, exciting. The success of lending platforms, however, will depend on the right of blend clarity, trust, ease of use and human expertise that will drive the technological advancements in the coming decades.
Brian Brodie, Chief Executive at Freedom Finance