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TAKING A CLOSER LOOK AT ALTERNATIVE LENDING INDUSTRY AS WE APPROACH 2020

u200bThe alternative financing industry is fast emerging as one of the most massive sectors around the world, backed by the power of modern technology. As per the Statista report, transaction value in this segment, in 2019, was close to USD 267,123.6 million. This value is expected to show a further annual increase of 10% (CAGR 2019-2023). With numbers running in its favor, let us take a closer look at the alternative lending industry as we approach 2020. Let's delve into the trends that this financing segment might witness over the next decade.<br>

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TAKING A CLOSER LOOK AT ALTERNATIVE LENDING INDUSTRY AS WE APPROACH 2020

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  1. TAKING A CLOSER LOOK AT ALTERNATIVE LENDING INDUSTRY AS WE APPROACH 2020

  2. The alternative financing industry is fast emerging as one of the most massive sectors around the world, backed by the power of modern technology. As per the Statista report, transaction value in this segment, in 2019, was close to USD 267,123.6 million.

  3. This value is expected to show a further annual increase of 10% (CAGR 2019-2023). With numbers running in its favor, let us take a closer look at the alternative lending industry as we approach 2020. Let's delve into the trends that this financing segment might witness over the next decade.

  4. What Does Alternative Lending Mean?

  5. Small and mid-sized businesses often struggle with getting financing for their growth plans. Traditional banks have an arduous process and strict terms like heavy collaterals and high credit scores that not all start-ups can meet. The situation intensifies when the company has an excellent time-sensitive growth opportunity at hand but is held back by a lack of capital reserve and established lines of credit. This is where alternative lending sources step in. 

  6. Unregulated by a government regulations, alternative lending sources provide much-needed capital flow to start-ups. For instance, Cresthill Capital and Mantis Funding provide financing without collateral and credit scores. Definitely, alternative financing options have boosted the start-up culture incredibly. Talent and opportunity no longer need to die at the hands of the capital crunch.

  7. ​Trends in Alternative Lending Industry in 2020

  8. As we inch closer to 2020 and with the emergence of reports indicating a shift towards alternative financing industry, there is a lot to be analyzed about the lucrativeness of alternative lending sources. The next decade is definitely going to be remarkable as we'll see alternative financing becoming plan A from plan B. Here are some of the exciting trends that the oncoming decade could bring.

  9. ​The emergence of Artificial Intelligence and Machine Learning in faster loan processing

  10. Alternative lending sources draw more affinity from small and medium-sized businesses due to the ease of financing and speedy disbursal. Where traditional banks stutter due to regulations, alternative lending sources sail past smoothly. In the next decade, we will be witnessing some fantastic technological implications in the FinTech world. 

  11. Alternative sources would use Machine Learning and Artificial Intelligence to speed up the credit approval process further. AI advancements would improve customer experience and streamline the process. No more being dependent on the sole discretion of the credit approval officer. The AI applications would trickle down from sophisticated high profile companies to ordinary lenders.

  12. ​The Robust Alternative Lending Decision

  13. ​The decision to approve a financing request application is already witnessing an undercurrent. The next decade is going to further solidify the lending decision through a more mature and robust model. Creditworthiness would no longer depend solely on the customer's credit score, income, or FICO score. 

  14. Futuristic ways to gather alternate data, like digital footprint analysis, social media networks, and psychometrics, would help pool together the financial and social data about a potential client. There are Tech companies already aggressively working on the concept. 2020 might actually be the start of a new renaissance in the lending industry.

  15. Customized Offerings

  16. One of the most influencing factors in the success of an alternative lending source is the user-friendliness of the delivery channels and the lending infrastructure. This is where a lot of nationalized banks fall behind in the race. Topping this, the alternative lending industry would experience the beginning of a new era in the 2020s, wherein customized products and financial solutions would become the most sought after.

  17. Cresthill Capital and Mantis Funding are already working a step ahead by offering cash advances of different sizes without basing it on credit scores. The new advancements would help in scientifically matching a customer's profile to the most appropriate pre-baked financing offer/ product that can be tailored further as per need.

  18. ​To conclude, the 2020s decade is going to be very exciting for small and mid-sized businesses, who'll be further financially empowered through the new, smarter, and advanced alternative lending industry.

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