Six major trends in lending for financial marketers in 2019
The forecast for most forms of consumer credit is upbeat. Lending volume, growth in balances, and overall performance look good for the year ahead. This will encourage some banks and credit unions to try new marketing strategies, explore new products, and experiment with new technologies. Here are six major trends in consumer lending that financial marketers must watch closely.
1. AI-Powered Consumer Lending
Fintech lenders are making inroads into banking markets by harnessing advanced analytics and non-traditional data as they automate and fine-tune underwriting processes, notes a report by CAPCO. There’s no reason traditional lenders can’t follow suit, using artificial intelligence and data analytics to find prospects, evaluate creditworthiness, and monitor and manage the loan portfolio.
One caveat is regulatory scrutiny.
While not intending to interfere with marketplace forces bringing evolution of financial services, regulators have concerns as AI, often a “black box” for many, assumes a larger role, according to Federal Reserve Board Governor Lael Brainard. She says regulators will be expecting to see the appropriate controls in place to be sure that AI doesn’t produce unintended consequences for lenders or borrowers.
On one hand, according to Brainard, AI has the potential to expand the availability of consumer credit by evaluating factors that go beyond traditional credit metrics. “AI also has the potential to allow creditors to more accurately model and price risk, and to bring greater speed to decisions,” Brainard notes.
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