Fintech Lenders on KYC and Loyalty Program Funding

However, lenders – fully aware of the plight of customers and rising interest rates – have canceled many of their affordable products and services, leaving fewer credible options in the market for consumers seeking loans.

Even when strong agreements are made between banks and consumers, economic instability is a constant source of stress. In the UK alone, inflation is at its highest level in 40 years – and rising energy prices show no signs of abating. These elements put additional pressure on companies and lenders.

Moreover, as expected, spending has contracted and savings are also running out. So how can consumers protect their financial assets, maintain their savings while maintaining a healthy relationship with their financial service provider?

In the era of digitized global finance, the humble Credit Union has a lending solution that just might preserve currency for even the most financially distressed borrower – in the form of fidelity loans.

How do loyalty loans work?

According to the UK Wiltshire and Swindon Credit Union (WASCU), Loyalty Loans are a style of loan product that protects customers’ savings when requesting financing for essential purchases or expenses. Rather than using their own money to secure a transaction, the lender will provide up to five times the amount saved by the saver, with the option to repay the loan within a flexible time frame – and usually with lower interest rates. to those of standard lenders.

Given the current financial climate, helping customers retain their assets while enabling flexible borrowing may well be a lifeline to protect consumers’ assets while providing flexibility and purchasing power. The loans are also based on the cash amounts that the client has regularly saved, thus reducing the risk for the lender while inducing the client to save more.

Steve Zimberg, Marketing Director, North America at FintechOS, indicates that market conditions will always fluctuate and that financial institutions must be nimble enough to serve their customers and members in these times of flux. “Loyalty and savings loans are products that can certainly be useful to support customers/members seasonally or for emergency needs.”

Either way, he says a financial institution’s ability to act quickly and serve its members is critical. “Organizations with a High Productivity Fintech Infrastructure (HPFI) can quickly pivot to meet the needs of local and economic market conditions, and quickly configure and customize lending products and journeys at scale.”

This can be a real boon for financial institutions of all sizes, especially for organizations that want to enter new areas of opportunity but may not have the resources to execute such a move or are committed to a legacy banking core and cannot act quickly. “Having the right HPFI helps financial institutions stay relevant in all economic climates,” says Zimberg.

Loyalty loans are also another option in a market where choice is key to customer service. Zimberg emphasizes that clients should explore and review the terms of each type of loan and decide with their financial advisor on the right option for their particular needs.

Conversely, financial institutions must be prepared to pivot in different economic climates and offer customized loans – of all types – that meet the needs of their customers/members. “Financial institutions unifying their online and in-branch loan application process through a single digital experience can ensure customers compare loan terms and make informed decisions.

“Additionally, in most cases, using a High Productivity Fintech Infrastructure (HPFI), bankers can easily customize unique products and journeys, make lending recommendations based on their client’s creditworthiness, and automate the decision-making based on their lending criteria,” he says. .

Caution is needed for both borrowers and lenders

In light of the current situation, it is essential to exercise caution when considering borrowing, says Richard Eagleling, personal finance expert at NerdWallet. Not only do lenders need to be much more circumspect, but customers also need to think long and hard before committing to additional monthly repayments that may well increase due to changes in interest rates.

“Borrowers will need to prepare for the likelihood of increased repayments, such as higher mortgage rates. And, with inflation expected to continue to rise throughout the year – even with interest rate hikes – many consumers will understandably be concerned about how they can afford to make more current bills.

He continues: “Individuals should not delay in taking steps to prepare. Keeping track of all inputs and outputs will be essential to help them identify potential problems or identify areas where savings can be made. »

Andrew Megsonexecutive chairman of My retirement expert, agrees and asserts that rational decision-making is essential for all age groups. “It’s so important right now to refrain from making rash decisions that could later harm someone’s financial security. When it comes to retirement planning, in times of economic uncertainty, it is crucial to first review your retirement strategy,” he advises.

“Similarly, a sensible decision would be to speak to an independent financial adviser to explore all available options, whether annuities, flexible access drawdowns or riskier investments that may offer more favorable returns against to inflation. There is no one-size-fits-all; it’s about finding the right approach for your situation and your needs.”

Loyalty programs build customer loyalty

Finally, it’s also important to consider that good loyalty programs, such as savings-incentive loyalty loans, build customer loyalty. A symbiotic relationship is forged between the supplier and the customer, where both benefit from their mutual cooperation. At a time when the choice of services in the marketplace is more competitive than ever, creating an environment where customers feel safe and valued has never been more important.

According Andy Nemes of the loyalty management platform Antavo, customer retention has become an increasingly important challenge for fintechs and banks. He writes that “reason loyalty of the clientele in financial services is a pain point for many companies in the sector is that their attention is divided between several pressing challenges”.

Nemes highlights three key areas that lead to lost customers. They are;

  1. A lack of digital presence
    To accelerate the process of digital transformation, companies must offer solutions that encourage online interactions.
  2. Growing competition
    When fintechs lack effective customer retention tools, it’s all too easy for customers to switch to a competitor with better deals.
  3. Worthless loyalty programs
    Customers need relevant benefits for a loyalty program to be effective. Loyalty programs that don’t consistently add value lead to poor retention.

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