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Bryan Tay (Photo courtesy of Lendela).

Why banks need fintechs to buoy loan growth

Loan demand has doubled in Singapore, and fintechs can help onboard quality clients.

With interest rates declining and competition amongst lenders intensifying, Lendela envisions the role of fintechs — and especially lending platforms like itself — as increasingly indispensable in the banking and finance industry.

"We believe the path forward involves leveraging fintech innovations to streamline and modernise traditional banking operations and financial services,” Bryan Tay, Singapore country manager at Lendela, told Asian Banking & Finance in an interview.

Tay expects borrowing and spending to ramp up further in the near future. Organic loan demand has grown beyond 150% over the past two years, whilst data from Google’s Keyword Planner shows that search volume for personal loans in Singapore has doubled over the past year, he noted.

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The bridge
Tay primarily sees the role of fintechs in the lending and financial space as that of a bridge: reconciling the gap between legacy systems and modern financial needs.

For that, partnerships are in order.

“We believe the need for greater collaboration between banks and fintechs and the imperative to continuously adapt to changing economic conditions and consumer expectations is a critical part of this innovation,” Tay said.

One way that fintechs — and in particular lending platforms like Lendela — can add value to the lending space is through introducing better models for loan matching and information dispensing.

“As competition intensifies in the lending space, information will become overwhelming for consumers, which often leads to less informed and more impulsive decisions,” Tay said. “This is where loan matching and the reverse auction model become especially useful to consumers, because they won’t have to deal with any of that but will still be able to access the most competitive rates available to them.” 

Fintechs like Lendela can help introduce more transparency and better inform the public, as well as to serve as a partner for banks and loan providers, helping them assess customers and manage customer acquisition costs, Tay said.

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Striking harmony
Tay believes that beyond competition, it is collaboration between lenders and fintech that will be key to improving the customer experience and driving the growth of the lending industry. 

“Banks and loan providers have great infrastructure and may have built strong brand loyalty, but leveraging fintech platforms like Lendela will benefit their acquisition strategy, unlock customer segments at scale, and also take pressure off customer support capabilities,” he said.

Fintechs like Lendela can help banks and lenders lower acquisition costs.

“We make it far cheaper to acquire high-quality customers with strong intent from the get-go with our unique matching model and Lendela’s acquisition machinery,” Tay said.

For example, Lendela also provides a layer of risk assessment to lenders whilst taking on the often resource-intensive work of providing personalised customer support.

It's a win-win situation for both, Tay said, as banks leveraging fintechs can bypass challenges related to their legacy systems and regulatory burdens, whilst fintechs can surpass hurdles in scaling and earning customer trust.

“For fintechs, partnerships with financial institutions can provide the necessary credibility and infrastructure to scale effectively. Lendela facilitates this synergy through our platform, helping banks reduce acquisition costs and optimise their offerings,” he added.

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The power of optimism
Whilst Lendela is optimistic for the future, they also acknowledged their role in the face of economic uncertainty. 

“One thing to note here is that lending isn’t going anywhere, especially in times of economic uncertainty. People will need additional financial support when times are hard, and every dollar saved in those situations matters even more in economic downturns,” Tay told Asian Banking & Finance.

For Lendela, this meant that their platform and service is “indispensable”, said Tay, who sees immense opportunity to scale across advanced financial markets across the Asia Pacific region.

“For lenders ready to adapt to evolving customer needs and improve their tech capabilities, we believe the future is promising. Lendela sees its role in this ecosystem as a catalyst for increasingly personalised customer experience, equitable access, and efficiency in the loan journey,” Tay concluded.

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