TOP CONSUMER LENDING TRENDS FOR 2024 & BEYOND

In the face of continued high interest rates, consumer lending is being transformed by several fast moving trends. Digital lending platforms are becoming the norm, offering enhanced convenience and quicker service for borrowers while reducing operational costs for lenders. There is a growing emphasis on sustainable and green loans driven by consumer demand and regulatory incentives. Buy Now, Pay Later (BNPL) options continue to gain popularity, providing flexible payment solutions that boost consumer purchasing power. Open banking enhances customer experience through greater data sharing and financial inclusion. Together, these and other consumer lending trends highlight the dynamic and rapidly evolving nature of the consumer lending landscape.

Top 10 Consumer Lending Trends for 2024 and Beyond
Trends	Descriptions	Lender Strategies
1) High Interest Rates	High interest rates impact consumer debt affordability, leading to larger monthly repayments. Lenders must adapt to this change and consider creditworthiness criteria.	Offer adjustable-rate mortgages (ARMs) or longer loan terms to improve affordability; consider alternative underwriting methods for borrowers with limited credit history; focus on niche markets with strong financial positions.
2) Digital Lending Platforms	Increased convenience and speed for consumers; lower operational costs for lenders.	Invest in robust digital infrastructure; streamline online application processes; offer 24/7 customer support.
3) Increase in Green Lending	Environmentally conscious consumers drive demand for sustainable financing options. Lenders should explore green lending products.	Create green loan products; partner with eco-friendly organizations; promote sustainability initiatives.
4) Open Banking	Enhanced customer experience through data sharing; improved financial inclusion and better insights into borrowers’ financial behavior.	Adopt open banking APIs; enhance data security measures; offer customized financial products based on shared data.
5) Hybrid Work Impact	Changing borrower profiles and needs; new opportunities for remote lending solutions.	Adapt lending criteria to remote work scenarios; offer flexible loan terms; develop remote-friendly customer service.
6) Customer Experience Focus	In a competitive market, lenders prioritize a seamless and positive customer experience throughout the borrowing process. This includes offering clear communication, multiple touchpoints, and user-friendly technology.	Develop and deliver efficient, user-friendly services to attract responsible borrowers; prioritize clear communication, multiple touchpoints, and user-friendly technology.
7) AI-Powered Credit Decisioning	Enables faster, more accurate loan approvals and personalized offerings	Invest in AI and machine learning technologies; partner with fintech companies specializing in AI-driven credit models; update and refine algorithms with new data.
8) Regulatory Changes	Lenders face a complex matrix of regulatory changes. Adapting to stricter borrowing conditions and tailoring strategies is essential.	Monitor regulatory updates and adapt swiftly; train staff to adhere to evolving rules.
9) Buy Now, Pay Later (BNPL)	Provides flexible payment options for consumers, potentially increasing sales for lenders and merchants	Integrate BNPL solutions into checkout processes; collaborate with retailers; ensure clear communication on terms and conditions.
10) Embedded Finance Solutions	Integrates lending services into non-financial platforms, creating new revenue streams and improving customer convenience	Partner with non-financial platforms; integrate lending products into everyday apps; streamline the user experience for seamless transactions.

These strategies can help lenders stay competitive and meet the changing needs of consumers in the evolving lending landscape of 2024.

Consumer Lending Trends: Technologies

These consumer lending trends are enabled by rapidly evolving technologies. Here are several key trends shaping the industry in 2024:

• Digital Lending Technologies: Convenience and efficiency are driving the digital lending market. Expect more automation, online applications, and faster loan approvals with minimal paperwork.

• Cloud-Based Platforms: Cloud computing offers lenders flexibility and scalability. This allows them to launch new products faster, improve their IT infrastructure, and adapt to changing market conditions.

• Alternative Data Sources: Account Information Services allow lenders to access borrower bank data with consent, enabling more accurate risk assessment and potentially faster approvals.

• Security and Compliance: As technology advances, so do security threats. Lenders need robust cybersecurity measures to protect borrower data and comply with evolving regulations.

• AI and Machine Learning: Lenders leverage artificial intelligence (AI) and machine learning for tasks like risk assessment, fraud detection, and loan servicing.

These are some of the technologies that are transforming the consumer lending landscape, driven by changing consumer expectations.

defi Provides Industry-Leading Loan Origination Technology

defi’s origination systems enable lenders to leverage the latest trends and technology to make consumer lending more productive and efficient. With defi, you get:

• Cloud-based platforms that eliminate downtime and provide rapid processing times and scalability
• Fully integrated mobile apps
• Automated decisioning, conditioning, deal structuring, and funding to maximize ROI
• No-code configuration for workflows, rules, policies, features, and admin functions
• Data analytics capabilities
• Built-in APIs and quick integrations
• Customer-facing portals and other customer service tech
• Integration with third-party services and partnerships, like compliance and risk management
• Support for advanced features like AI and machine learning.

There’s no denying the benefits of having an industry-leading loan origination platform. Lenders increase revenue when customers are happy. Let’s talk about your needs.